The Political Economy of Post-Colonial Taxation in Kenya, 1973 -1995

Abstract

The Kenyan tax system as we find today is a British colonial legacy that was closely bound up with the development of the system of political governance and the maintenance of law and order. Besides, taxation helped transform a subsistence economy into one where money and a market system determined the exchange process. In short, the introduction of taxation changed the mode of exchange and the entire fabric of African society and reordered it to meet the needs of a capitalist economy. Independence in 1963 did not alter the parasitic nature of the colonial state. Subtle and opportunistic ways continued to be used to extract taxes from the peasants and the working class. GPT impoverished the poorest members of society who had no definite source of income. In 1973, after slightly more ten years of implementation, GPT was abolished altogether as a source of revenue for both the central and local government. It had been a brusque form of direct taxation on Africans. The abolition released the non-salaried from the payment of taxes, which basically was more burdensome to the poor than to the rich. But for those in paid employment, there was introduced a new form of ‘pay-as-you-earn’ (PAYE) system that taxed an individual’s income according to how much one earned.