TAX-VEXATION
There has been a great concern on tax changes to be implemented by the new government. Some people are really in for the move while to others, the proposal is greatly vexing. To have a good view without any bias, Reikims Ventures toured the home of a renowned economist; Muguro Paul who expounded more on tax and its implications to our economy.
“In the wake of the proposed taxations, many are worried on where this will take us as a country? We might think, this is a good way to source revenue for the various projects and budgets that we have as a country, but how much is too much. Sometimes taxation can cripple the economy that it was supposed to revive. Take for instance where the tax is too much for the citizens to bare what transpires is that the amount of disposable income reduces which in turn brings about a reduction on the expenditure of the taxpayer on necessities, this hinders efficiency on their part which brings about poor production and lastly a failed economy in terms of production, distribution and consumption.
However, taxation can be used as an incentive in business or as a regulation that will from one side generate revenue bringing about economic growth and also in regulating the flow of some products in the market. Let’s say for example a higher tax on goods that are assumed riskier to the consumers health or behavior in consumption can discourage the persons consuming the products for the prices will be higher therefore regulating the demand and supply. In businesses you need to know what kind of tax is associated with your idea of a business for that is one factor that will determine the price, demand and consumption of your product. Apart from VAT, is there another tax on this product that I want to invest in? This is an important question that an investor has to ask themselves for it should inform on the price, demand and consumption of a particular good.
In conclusion taxation besides being an important tool in economic growth and economic well being of a country or even a market, if it’s overly done it will be the downfall of the economy or the market. How favorable taxation is determines how the entry into a market is and how sustainable that market is. The same is true when it comes to the economic growth and development of a country. Therefore, as you invest check out the taxation terms or types of taxes that are required in that field of investment.”
Taxation is an important aspect to consider as an investor or a business practitioner. Remember you can reach us through info@rekims.co.ke for any tax consultation. For other services visits our website at reikims.co.ke . Also our other contact details are given.
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