So instead of joining the online Kenyan ranting regarding the VAT 2013 Bill, maybe we share and propose some solutions to anyone who cares to listen? I'm no economist, but how about the following:

1. Kenya's annual recurrent expenditure has hit the one trillion shilling mark up by Ksh.340B - we have to SLASH it from the top down (this was before MPs, teachers, Governors, Senators demands get into the pic). I am sorry, some Kenyans rich and poorer will need to go home or take salary freezes if not time cuts for lower pay or work twice as hard for the same pay.

2. Increase the tax base. If you a landlord and you not paying tax, pls don't go whinin about VAT on milk. If you are an employer who has been deducting employee dues and not remitting them to KRA, STFU. If you are a consultant not remitting witholding tax, nyamaza etc

3. The value of the balance between imports and exports has to improve as we importing twice the value of what we are exporting (Ksh 1.3T v 518B). It means in the immediate term resuscitating local industry and providing investors with incentives. Spending more (requiring more tax) in the immediate term to achieve mid-long term objectives.

4. Strengthen accountability across all arms of government. Legislate economic crimes if we have to. Corruption has to be seen to be punished.

5. Phase out/stagger Jubilee new government spending programmes in the social sector.. Scheduled to go up to 41.1% i.e. by Ksh. 421B

6. Go after firms engaging in transfer pricing. This may mean job cuts for some, firms relocating but in the longer term, the economy retains taxes generated from poisoning of it's environment and exploitation of its workers. The horticulture flower farms lead the pack in tax evasion.

7. Reduce defence spending. Quick gain perhaps, are there any strategic interests left in remaining in Somalia now?

All these measures are hardest on the bottom of the pyramid so if we complain about milk then let us be ready to swallow the bitter pill of solutions.

What are yours?

Sure, no stifling creativity. For retail consumers, that suggestion in light of the new bank charges v inflation could be an option to evaluate?

9. Review Tax Breaks for foreign firms

In relation to tax collection by way of radical suggestion, it is time the GoK considered publish a costing and justification for each incentive offered, followed by monitoring of conditions and a tally of costs and benefits, so the public can see the impact of tax incentives.

An ActionAid report released this July 2013 showed that Kenya gave up $123 million (Sh10.5 billion) under the generalised corporate tax incentives based on the 2008/2009 financial results. This equals 21 per cent of the corporate tax collected in the same year...

OK, do we know how much we did actually get in return???

Foreign firms are supposed to pay 37.5 per cent of their profits as tax, with locals paying 30 per cent. A further $120 million (Sh10.2 billion) was lost through incentives to exporters and $68 million (5.8 billion) through Special economic zones.

Sarah Muyonga, a Tax consultant said this is despite the fact that such incentives have not translated into any surge in Foreign Direct Investment as intended.

"Uganda gives less incentives than Kenya, but attracts more FDI. Investors are not entirely enticed by these tax incentives," said Muyonga. The ActionAid report said the use of tax incentives by the government has dramatically increased from about 4 per cent of the firms to over 40 per cent between 1980 and the present.

"It is worrying wooing investors with unclear incentives such as land deals, tax breaks and other unclear tax deals to set up business in their countries. These create loopholes for corruption and give unfair competition to the domestic investors," Muyonga said.

It is time the GoK considered publish a costing and justification for each incentive offered!!

Ref 1 http://www.actionaid.org...x-free_deals_21_aug.pdf

Ref 2 -http://www.the-star.co.ke/news/article-127456/kenya-losing-sh100bn-tax-foreign-firms

Grow your own vegetables - sukuma, tomatoes, potatoes, onions etc

Keep a few chicken mainly for the eggs

Keep a cow if you can for the milk

Buy your food at Marikiti market not Nakumat and your meat from Dagoretti market (if you live in Nairobi)

Better yet, become a vegetarian.

Repair those shoes, dress, trousers that you were going to discard

Walk to work if you can.

Take a Boda boda instead of a taxi.

Buy wine, whiskey, vodka etc and drink at home

Watch movies on TV

Buy candles and have 'romantic dinners'

Get an Airtel sim card for making calls.

I like your thoughts @ecstacy

This is in addition to VAT raise from 12% to 16%.

This is kind of neglegible for domestic users since for 500KWH users thats about 25/= added to your 6000/=+ bill. For my house that NEVER exceed 200KWHr monthly, thats 10/- monthly.

Hiyo hesabu yangu iko sawa kweli?

This is not my idea, but something I heard while discussing the matter earlier today. I thought it had merit, so when I saw this thread I thought I'd mention it.

Why not impose a one-time mandatory tax on properties. Yani, everyone who is a registered owner of a property has a 0.5% one-time tax imposed on their property. The value used should be the same as that used to determine rates. Hence a property valued at KES 10 million will result in a KES 50,000.00 tax on the property owner.

This could net hundreds of billions if not over a trillion Kenya Shillings for The Treasury, and would obviate the need to increase VAT -- in fact, it would result in a welcome reverse of that order. It would provide the government with funding for a few years (assuming not all budget expenditure must be met from this source), and would solve so many other issues.

Like I said, not my idea but I thought it was a good one. Your thoughts?

am surprised no one has mentioned reducing size of Govt.The new bloated govt is part of the reason for your VAT woes.it is also a fallacy to assume farmers and gikomba people don't pay some form of taxes.For farmers please sit down and calculate what goes into the cost of production up to sales n marketing and there in you might find your answer.For Gikomba people that business is on its death bed because of heavy taxation of mtumba at port of entry.
Kenya is over taxed and the solution among many others that have been mentioned here is to reduce size of govt and lower tax rate plus widen the base.