The Accountant Nov-Dec 2016

Finance and investment
The proposal maybe something close to,
the government to rethink this incentive
and to have something similar tailor
made for the low income class.
4. Wife’s employment
income(section 45)
It is an outdated clause and section in this
era of “what a man can do, a woman can
do even much better. Do we still need the
income of a woman to be deemed income
of the husband? The proposal is to have
this part of Act deleted entirely.
5. Perdiem, imprest and
reimbursements
The canons of taxation call for simplicity,
convenience and certainty among others.
The current state of affairs in these areas
doesn’t adhere to these canons. Maybe an
illustration will demonstrate the bone of
contention. “An employee is sent by the
employer on an assignment outside his
normal working station. He or she has to
be away for, say 3 days, the costs involved
here, will be meals, accommodation and
traveling and maybe an allowance. Many
payroll accountants face difficulties in
determining how much to tax. Employees
themselves many a time feel cheated
by their employers. Accordingly, many
employees feel that no tax should be
levied on such allowances. Whereas some
employers argue that the whole amount
should be taxed (to avoid battles with
KRA). Everyone is trying to protect their
buttered side of the bread. But should
this be the case in this time and era?
The proposal here is to provide clarity
and proper direction. It is important that
certainty and convenience is achieved in
all aspects of our tax system.
6. Graduated tax scale and
personal relief
Kenya’s tax system is fairly progressive;
however it would be important to
review it. The Cabinet Secretary hinted
something to that effect. If it may be
adjusted to exempt any one earning up
to and including sh. 20,000 gross pay.
This may go a long way in bridging the
gap between the haves and have not’s. It
may help in harnessing a saving culture
and hence more savings and subsequently
more investments.
The proposal is that time is here to
consider the low income earners and to
also cushion the middle class to some
level. Review the graduated scale and
increase the minimum personal relief
from sh.13, 944 per annum.
Conclusion
I hope those who are concerned will be
able to make sense out of these few yet
important areas. I also hope that the few
minutes I took to pen this down did not
go to waste. May we, through this and
many other proposals, achieve the most
optimal tax system in Africa and beyond.
The Writer has served in different
positions including Finance Manager at
Marist International University College
(Catholic University), he is currently a
Lecturer of (Accounting and Finance)
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