The Accountant-Mar-April 2017

COVER STORY
There’s no surer ticket out of poverty
than a solid education, by secondary school
principal JM Mwangi (Boggi) may his
soul rest in peace always said this. But that
education has to be affordable, quality and
it has to be equally distributed. It would be
impossible to argue that’s true of Kenya’s
public schools, which are supported by
taxes. Big houses equal better schools. And
poorer kids, of course, lose out. That’s a
tragedy, and leads, to poorer students who
are years behind their richer peers.
My retiring mother has over sixty
pupils in her class 2, while my daughter
still in class two has twenty classmates,
what are the comparisons from their
performance? Education should be a great
equalizer, not a source of division. The
community would benefit from closing its
private school, and creating a shared asset
in the public school system. Right now, the
business community and richer families
have almost no reason to fully invest in
the public schools. Education is the most
necessary investment to create economic
sustainability and recreate class mobility.
Economic inequality is a problem, but
it is a problem created by governance. It is
not natural. If we created it, we can fix it.
Progressive and enlightened policies can
reverse the trends of the last five decades,
increasing wage growth for the bottom
income quintiles relative to wage growth
for the top earners by raising the minimum
wage to a livable level and raising top
marginal tax rates. Expanding welfare
rolls will also serve to curtail inequality
and augment the purchasing power of the
lower income earners. Long-term solutions
can be crafted.
In Kenya, it is the poor who end up
paying more tax as a proportion of their
income and this is just not right. When
the rich are able to avoid paying their fair
share of taxes, KRA must rely on the rest
of its citizens to fill its coffers. While tax
dodging goes unchecked, governments are
severely hampered from putting in place
progressive tax systems – so fairer domestic
tax systems depend on global transparency
measures. Influential corporations and
wealthy individuals constantly seek ways
to take advantage of special tax breaks
to shelter income that should be fully
taxed. However, rather than uniting to
demand fair deals with investors, Kenya
is competing with other developing
countries to see who has the best business
climate, the most generous tax holidays,
the best investor protection and other fiscal
incentives’
Power corrupts because it can be used
to obtain unfair advantage. One way to
address this is a balance of power. That is
why unions are important. They can and
have abused their power as has every other
powerful institution in this country. That
is an argument for limiting power across
the board with checks and balances. It is
not an argument for a single minded attack
on labor. From the start, government
policy has tilted strongly against unions
contributing significantly to disruptive
economic inequality.
What does the Scripture say about these
issues? From Genesis 1-3, we conclude
that work, industry and economics are
all a part of God’s good creation. In the
perfect environment of Eden, wealth
was the natural state; indeed, wealth and
abundance were the norm! But due to
sin and rebellion against God poverty and
disparity of resources are now the norm.
As a Presbyterian, Because of sin and
judgment upon the entire created order,
poverty is now the norm, and Christian
economics focuses on overcoming poverty
for the sake of the love of God and
neighbor.
Wealthy elites have co-opted political
power to rig the rules of the economic
game, undermining democracy and
hindering economic growth and poverty
reduction.
Economic inequality can lead to
“opportunity capture”, which means that
the best education, the best health care
and the lowest tax rates will be claimed
by the children of the rich. If inequality is
not addressed quickly, we will soon live in
a world where equal opportunity is just a
dream. Rather than leaving the rest of us
to fight over scraps from the top table, the
investments and policies needed to put
right the imbalance of inequality must be
addressed if the poverty currently affecting
millions Kenyans is to be truly made a
thing of the past.
26 MARCH - ApRIL 2017