Is central Kenya paying fair share of tax in this country ??

Image result for mt kenya legislatorsCan Central Kenya contribute 60 percent of Kenya’s GDP, as recently claimed, by the region’s members of parliament?

If 12 percent (old Central Province) or 20 percent (including Meru, Embu, Tharaka Nithi and Laikipia) percent of the work force is responsible for 60 percent of the economy, what does that say about the rest of the country. What would make Kikuyus or GEMA community four or five times more productive than other Kenyans?

The word “contribute” is a loaded one. It suggests that there is a common kitty called economy to which some people put in more than others. This is of course not the case. The economy is the sum total of the goods and services produced in the country.

Image result for nyandarua potatoes

When Nyandarua grows potatoes that are consumed in Nairobi: which county has contributed more to the other’s economy? Neither—they have exchanged value, with each profiting from the other. The argument can also be a self defeating one. It justifies domestic import substitution. If we can champion “buy Kenya build Kenya”, why not “Buy Kilifi, build Kilifi”?Chart 2

The Central Kenya MPs are most likely to be under the impression that the region contributes more to the tax kitty. This is also a fallacy. The tax base and the economy do not overlap.

Ideally they should but they do not. In an economy with our structure we have, a large informal sector and largely untaxed smallholder agriculture account for half the economy, the correlation between the economy and tax base is pretty low. Image result for central kenya produceThe main sources of tax are profits, payroll taxes and consumption taxes (excise and VAT).

If Central Kenya is so much more prosperous, the more pertinent political question would be whether it is paying its fair share of tax.

That cleared up, we can now turn to the question of county economies. Which counties have the strongest economies? The simple answer is we do not know.

The Kenya National Bureau of Statistics (KNBS), the national statistics agency, only publishes national accounts for the whole economy. It is now publishing “County Statistical Abstracts” but these do not include GDP.Image result for facts meme

Six years on, the counties have not found it worthwhile to measure the sizes of their economies even though this is part of their mandate, and it is not particularly difficult or expensive.

So in my opinion central Kenya should be concerned with politics of development not idle talks of men sitting outside grass houses.

 

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