From subsidised maize to falling fuel prices and now the Covid-19-driven tax reliefs, businesses stand accused of failing to pass tax reliefs to consumers. PHOTO | FILE From subsidised maize to falling fuel prices and now the Covid-19-driven tax reliefs, businesses stand accused of failing to pass down the benefits to consumers, only counting the gain.
When the taxes fall against them, they are quick to pass them down in the hard-to-police free market economy.
When Treasury Cabinet Secretary Ukur Yatani presented his tax measures in the Finance Bill 2020, some State agencies and a host of private sector lobby machineries went into overdrive.
One presentation after another followed with each group striving to demonstrate how specific tax measures will affect their businesses and force them to pass down the expenses to the consumer.
While some may have succeeded with the final Bill going before the President containing rejections by MPs, analysts contend that the missing trickle down when policy measures favour wananchi , has set the businesses for Treasury’s punitive taxes.
From subsidised maize to falling fuel prices and now the Covid-19-driven tax reliefs, businesses stand accused of failing to pass down the benefits to consumers, only counting the gain. When the taxes fall against them, they are quick to pass them down in the hard-to-police free market economy.
FREE MARKET FORCES
Dr Paul Gachanja, chairman of the Department of Economics at Kenyatta University, believes the realisation that there are market forces and a complicated value chain that will always bar the benefits from reaching consumers, should be Treasury’s point of awakening while designing policies in the first place. An attendant fuels a car at a petrol station in Nyeri Town in March 2020. PHOTO | FILE | NATION MEDIA GROUP “If you are targeting the common consumer, then you must find a way to circumvent the conventional system, which comprises organised groups who will always push for their interests.
“You need to take it directly to the consumers and then find ways of compensating traders who are then bound to obey the passing down of the benefits. Otherwise they will reap from it and shoot down any measures that don’t favour them,” Mr Gachanja told Smart Company.
The economist believes that the consumer who in many cases is never represented, will remain locked out of the benefits as long as the policies are structured to start from the top where traders are, […]
