There has been a lot of furore of late about the 16 per cent levy on petroleum products, which came into effect on September 1. Those opposing the move claim that the new tax will have a significant impact on the cost of living as the prices of basic commodities increase to reflect it.
They also note that Parliament voted to suspend implementation of the levy for a further two years until September 2020, so as to cushion the public from the effects of the increase and that this decision should be respected.
However, though persuasive, these arguments are ultimately flawed.
Yes, the new tax will increase the cost of living, and many Kenyans will feel the squeeze as the price of goods increase overnight.
But this is the case with all taxation. The reality however, is that without taxes of this nature, the government cannot provide us with the essential public services that we so desire, and that Kenya needs.
We all applauded when President Uhuru Kenyatta announced his new and bold Big Four Agenda – universal affordable healthcare, 500,000 new affordable homes, food security for all and the revival of Kenyan manufacturing creating millions of new jobs.
These are all things we almost universally support. And so, when the Budget Committee approved the Sh3 trillion budget for the 2018/19 financial year, which would provide the funds for the Big Four as well as a massive wave of infrastructure development, we praised the government.
These are what economists would describe as merit goods – those that we should all have access to on the basis of need, not on the ability or willingness to pay. These are goods that are most efficient for government to provide, and those that as individuals we are unlikely to be able to afford or want to spend our money on (when was the last time any of us built a road or a hospital!) but that when government provides them, we all benefit.
And so, if the government needs to take a little bit more from the public in order to dramatically move Kenya forward and build a better life for us all, that is something we should all support. Though it may make many of our lives a bit more difficult in the short term, the long-term impact on Kenya will be huge. Furthermore, if government fails to seriously invest in these projects and goals, the negative impact will be felt for generations to come. As with many things, the pain we will ultimately feel from of inaction is far greater than the pain of action.
The issue of the postponement is a similarly short term one. Since it was first announced in 2013, the levy has been suspended three times. This would have been the fourth. This is an act of political cowardice by our MPs. They know that the levy is desperately required, but ever wary of losing their seat and the perks that come with it, they are unwilling to vote for something that may be unpopular. And so, they ‘kick the can down the curb’, postponing the tough decision for another two years.
Therefore, despite the impact that it will have on my own life, I am proud that my government decided to take an unpopular decision for the greater good. I am proud that our president is prepared to be unpopular in the short term all for the benefit of the public. This is leadership. It is what we have been lacking all these years.
The same is true with the fight against corruption, the other pillar of Kenyatta’s second term. Here too the medicine – lifestyle audits for all public servants, rigorous checks on all tenders and the arrest of hundreds of senior figures – is harsh. But here too it is required for us to live. It is estimated that if corruption is not extensively fought, Kenya stands to lose Sh700 billion. That would have to be made up either through further tax increases, or through ditching the much-needed health and housing improvements, neither of which we can afford.
And so just as with the new tax, my advice to everyone is to get on board with the anti-graft fight. Though it may be uncomfortable, the cost of doing nothing is far worse. As Margaret Thatcher famously once said, “Yes, the medicine is harsh, but the patient requires it in order to live. Should we withhold the medicine? No. We are not wrong.”