Tax Justice: about human dignity and wellbeing

Three Jesuit organisations have commissioned research to study correlations between tax and poverty. The final report was presented at a conference taking place in Nairobi, Kenya considering aspects of Tax Justice and Illicit Financial Flows. Ricardo da Silva SJ was at the launch of the report in Nairobi, Kenya.

14,7 million Kenyans live in extreme poverty, that’s 29.4% of the national population. If that’s not sufficiently devastating, the World Bank estimates that in fact, it’s closer to 17 million, or 35.1% of the total population.

These are some of the alarming statistics cited in a new report presented at a conference in Nairobi, Kenya on 12 March 2019 into tax justice in the African nation.

Tax Justice and Poverty in Kenya is a report that forms part of a much larger body of investigative work analysing the correlation between tax and poverty in three countries: Kenya, Zambia and Germany.
On the first day of the Nairobi conference at the capital’s Crowne Plaza hotel, the focus was firmly on Kenya and the findings of the report as pertains to one of the largest and most prosperous African nations.

The technical report into tax and poverty in these three nations spans more than 200 pages and can be found online at www.taxjustice-and-poverty.org.

The conference titled “Domestic Resource Mobilisation and Stemming Illicit Financial Flows: Tax Justice for Promoting Equality and Social Justice”, has attracted more than 100 delegates from across the world to the Kenyan capital city.

Those gathered hope to interrogate issues surrounding just taxation and poverty to offer solutions to this mammoth problem. Over three days they will consider the empirical, ethical and practical aspects of taxation, poverty and inequality.

The conference is jointly hosted by three Jesuit Institutions, the Justice and Ecology Office of Jesuit Conference of the Jesuits in Africa, the Nairobi-based Jesuit Hakimani Centre and the Jesuit Mission Office in Nurnberg, Germany.

In his keynote address at the conference, Chris Kiptoo, the principal secretary for trade in the Kenyan government, presented his government’s aspirations for curbing illicit financial flows and dealing with the trend of corruption that seems to be making the rounds, globally.

Kiptoo also pushed Kenya’s Big Four Agenda, focused on manufacturing, housing, health and food and nutrition security. He reminded delegates of the bold promises that this agenda makes to Kenyans and hopes to realise by 2030.

Through manufacturing, Kenya hopes to raise domestic manufacturing levels from their present 8.4% to 15%, and with it provide 1 million new jobs.

Kenya’s housing ambitions are grander yet. 500 000 new homes will be built for Kenyan families, creating 300 000 new jobs.

It is also promised that the cost of owning a home will be reduced by 50%, that basic health services will be entirely subsidised by the national government and that the average basic income will be raised by 34% — all by 2030

But there’s a serious problem with these ambitions: desirable as they may be, they are entirely unrealistic given the major levels of national debt that the country is desperately struggling to service.

Charles Chilufya, a Jesuit priest and director of the African Jesuits’ Justice and Ecology Office, addressed the conference, next.

Charles Chilufya SJ, opens conference on Tax Justice in Nairobi // Ricardo da Silva SJ, spotlight.africaCharles Chilufya SJ, opens conference on Tax Justice in Nairobi // Ricardo da Silva SJ, spotlight.africa
According to Chilufya, though tax justice is a major economic problem and number-crunching essential, there is something far deeper that brings together “various actors and thinkers” in international taxation for a three-day conference.

“We are not concerned about money; rather about human life, dignity and wellbeing. How can we live together and share what we have? This is about social justice and equality.” This conference is about “matters that concern humanity”.

This presented the impetus that led to the Jesuit organisations commissioning this major study.

Pascal Pax Andebo, working on the tax justice project at the Jesuit Hakimani Centre in Nairobi, presented the report.

Explaining its findings, he used a phrase often heard: “the rich get richer and the poor get poorer”. But this was not a clichéd expression, employed simply for popular effect. He was clear in justifying this claim.

In Kenya, 8 900 citizens (0.1%) hold 80% of the nation’s wealth. Also, only 20% of the country’s land is arable and is owned by its wealthiest 3%. The inequality is stark and distressing.

Pascal Pax Andebo of Jesuit Hakimani Centre presents report, ‘Tax Justice and Poverty in Kenya’ // Ricardo da Silva SJ, spotlight.africaPascal Pax Andebo of Jesuit Hakimani Centre presents report, ‘Tax Justice and Poverty in Kenya’ // Ricardo da Silva SJ, spotlight.africa
This means that the balance of power is in the hands of the wealthiest. It also means that these should shoulder the majority of the country’s tax burdens. Still “tax policies favour the rich” and provide them with “legal, administrative and policy loopholes”, such as tax incentives, to evade and avoid their national obligation as citizens, to pay taxes.

Andebo’s exposition of the report was followed by an expert panel discussion. A number of important issues were raised, which only reared further alarm and anger, palpable in the heated replies of the participants.

Having assessed the situation with respect to taxation practice and policy in Kenya, the report recommends a radical revision of the country’s tax policies to improve tax practice.

Replying to Andebo’s presentation Alvin Mosioma, CEO and executive director of the Tax Justice Network Africa, said that in Kenya VAT accounts for 40% of the country’s total revenue. VAT is a consumption tax that is easy and the least disruptive to collect, he said.

Mosioma suggests that this form of taxation is aggressive, and asks whether this is simply “aberration in the system or is the system an aberration?”.

One respondent to the report was Attiya Waris, a professor in the commercial law department at the University of Nairobi investigating matters of taxation as they relate to the alleviation of poverty and promote development in developing countries.

Attiya Waris, listens as Tax Justice report is presented // Ricardo da Silva SJ, spotlight.africaAttiya Waris, listens as Tax Justice report is presented // Ricardo da Silva SJ, spotlight.africa
Waris suggests that in fact only 1.7 million Kenyans actually pay tax; because out of 2.6 million registered taxpayers, 900 000 of these are corporations and not individuals.

She expressed her hope that the report might’ve considered this reality better; looking more into the failures and loopholes in the system that enable non-compliance with tax.

One aspect that worried her particularly with respect to the Kenyan tax system was the electronic filing system instituted in 2015.

The system automatically excludes a significant number of citizens from the tax system for a myriad of reasons. Either they do not have the skills and literacy expected or the access to the technology, which is required to interact with the internet-based system through which their tax returns ought to be submitted, she said.