Benjamin Franklin, in a letter to Jean-Baptiste Leroy, in the Year 1789, wrote 'Our new Constitution is now established, and has an appearance that promises permanency; but in this world nothing can be said to be certain, except death and taxes.'
The Finance Minister has proposed a raft of taxes including a proposed 10 per cent tax on mobile money transfer services. Before I focus on this tax in particular, let me float the Idea that the finance minister and his team at the Treasury might be well served by looking at the tax structure in its entirety.
I have a theory that the Treasury should be cutting taxes and that this will spur growth, increase compliance and over time increase the revenue take for the government. It might sound counterintuitive but it has worked before and if I were the finance minister, I would be at least testing this model.
I would also be looking at the monster that is the government of Kenya's recurrent expenditure and taking a knife to it. It is time for innovation because otherwise we are ending up where we are now, in a seriously sub optimal place.
Now let me return to the proposed 10 per cent tax on mobile money transfer services. "Excise duty on fees charged for money transfer services by cellular phone service providers, banks, money transfer agencies and other financial service providers shall be ten per cent."
Mobile money deposits made by Kenyans between 2011 and 2012 were close to Sh672 billion (US$8 billion), almost equivalent to half of the country's national budget.
This equates to a 38.1% year on year increase. There are 19.5m mobile money subscribers in Kenya. We are a world leader in mobile money.
Our financial inclusion rate at our GDP per capita is off the charts. This phenomena has allowed us to rebrand ourselves [though some members of parliament are evidently trying their level best to light a bonfire under that trend] as very 21st century.
Mobile money and M-Pesa in particular is the jewel in Safaricom's and in Kenya's crown. I was at a conference in Switzerland a few weeks ago and the chairman of Credit Suisse Zurich mentioned it as a phenomena that even Switzerland [the banking centre of the world] could not match.
The impact on GDP has yet to be measured correctly but I have seen research which established that without the mobile phone and mobile Money, Kenya GDP growth would have been zero. Just consider that fact. I venture that when you have a golden goose which is laying golden eggs, You should not garotte it. [A arotte is a weapon, most often referring to a hand-held ligature of chain, rope, scarf, wire or fishing line used to strangle a person or 'goose'].
Nearly a million Kenyans bought shares in Safaricom at five shillings a share. They remain underwater to this day although I believe the price will top five before the year is out.
The government set that price. M-Pesa is the jewel in Safaricom's and Kenya's crown. The government has not been able to sell a thing since then. Not a thing.
These shareholders are not patsies and it behoves the government to understand a simple truth. Lets stop punishing our great successes at the expense of our greatest failures like the members of parliament.
Societies and countries out perform where success is rewarded and failure is culled. And I advise each and every parliamentarian to read Ryszard Kapuscinski who wrote this about revolution; It is authority that provokes revolution....This occurs when a feeling of impunity takes root among the elite: We are allowed anything, we can do anything.
This is a delusion, but it rests on a certain rational foundation. For a while it does indeed look as if they can do whatever they want. Scandal after scandal and illegality after illegality go unpunished.
The people remain silent...They are afraid and do not yet feel their own strength. At the same time, they keep a detailed account of the wrongs, which at one particular moment are to be added up.
The choice of that moment is the greatest riddle of history. Mobile Payments more popular in Kenya than Switzerland says Credit Suisse chairman.
Comments Post a comment