For the poor, who are the majority, food and other basic commodities like shelter consume over 70 per cent of their household budgets. When you add healthcare, school fees and other expenses, they normally have nothing to save and are perpetually in a debt trap.
Effective January 1, low-income earners who earn less than Sh13,486 will not be subjected to pay-as-you-earn tax (PAYE). This amount increased from Sh12,260. At the same time, the government ended its subsidy programme where a packet of maize cost Sh90.
Every year, the Exchequer announces what they call a ‘pro-poor’ budget but by these indications, the poor in this country are on their own. It is not only government but employers too who have always used such schemes like paying fees for their staff or constructing a school near a flower farm so that the children of workers can study freely and cheaply.
It would be prudent to increase the employees’ salaries and let them decide what to do with it. Money gives a choice. The other example would be providing the annual relief food to drought and hunger-stricken families and areas.
Simple logic indicates that a person who begs for relief food simply has no problem with access or the price, but she or he lacks money.
We should be solving the problem of money being in the pocket of households that way.
Even if there will be drought, these people can still access food. From the figures above, am afraid increasing the ‘not’ taxable bracket of PAYE by a thousand shillings then doubling the price of basics is in itself a zero-sum game. In fact, the poor will be worse off than they were.
Some may argue that the higher prices are as a result of demand and supply dynamics, but the truth is that is a deliberate scheme and neglect by their government. It is a pity that in 2018, a ‘middle-income country’ having more arable land and fertile soils cannot feed itself.
And during the rainy season, the cost of production goes high as farmers realize the ‘fertilizer’ meant to be subsidised is actually not subsidised.
That the one million acres Galana Kulalu Irrigation meant to solve the maize deficit in this country, five years down the line it is still at a pilot phase of 10,000 acres.
That while sugar and maize import business thrives, benefiting a few, hundreds of thousands of farmers are abandoning the crops, still have maize in their shambas, some have not been paid money for delivery months down the line, and National Cereals and Produce Board (NCPB) depots have a huge line of uncollected maize from farmers.
The poor in this country need tangible and realistic interventions for them to enjoy the disposal income and end the perpetual cycle of poverty. They need relief from the exorbitant spending side.
On housing, the majority of private investors are offering homes for the middle and upper-class citizens leaving the poor to inhabit informal settlements and slums sprawling in urban centres.
The focus hence by the government is not for National Housing Corporation to invest in that target market too, because there is no shortage of private investors in that segment, but to construct affordable housing for the poor akin to what World Bank aided along the Jogoo Road.
However much the poor earn, if food and shelter is always on the upward trajectory, they will always be stuck at that level.
Many of these failures are less to do with some grand conspiracy of the elites to maintain their hold on the economy and more to do with some avoidable flaws in the detailed design of policies.
The government needs to truly put in place policies that uplift the poor to the middle income.
The policies will also trigger sectors like retail and transport putting the economy on a growth path. That way, even tax collected by KRA will increase.
As at now, KRA is facing pressure to raise revenue from this thin layer of taxpayers totalling only two million in a country of over 15 million active adults.