Listers,

Taxation is *always* a double edged sword. In this instance, we would have to ask ourself what is the *NET* effect we want to achieve with the taxation?

As an example, our current and previous tax have been to increase ICT usage, at all costs. Lower the taxes and all the computers and software will become very cheap and affordable and ICT industry can take off.

However, that in my view doesn't have the necessary depth.

Take for example the local industry, every time you lower the taxes, and especially import taxes, you make it that much harder for your local industry to grow as it immediately faces stiff competition from the global players. Your market becomes the dumping ground for every multi-national who sell their products to your market cheap, and then immediately take off with all the profits without re-investing in the local economy.

Taxation can and should address that.

If you look at the policies of most of the developed nations, one thing at the center of their taxation policy is ensuring their local industries thrive and force outsiders on the very least to consider moving their manufacturing to their markets as that creates jobs and also leads to knowledge transfer. A good example of this, it is not by chance that most Japanese car manufacturers in the US have manufacturing plants in the US, policy (including taxation) forces them to.

Also it is not a coincidence that there are hardly any US cars bought in Japan ( http://americanautocouncil.org/sites/default/files/Japans%2BProtected%2BAuto%2BMarket.pdf)

Now, we could ask, what have our current taxation policies brought us:
1. High consumer usage of ICT
2. Non-Existent local high-technology sector (we wouldn't built our own Huwaei's, Motorolas, Samsungs as these multi-nationals are able to import goods into our markets with almost no taxation, hence making it almost impossible for a local to challenge them)
3. Non - existent high technology export (if we do not have local firms that can build technology solutions, we have nothing to export)
4. Engineers(Electronics, Electrical, Industrial Design) who have no places to work since there are not enough local firms that could use their core-services (and repairing broken fibre links is not what one spends 5years learning electronics in campus to do)

So we will remain a country of high ICT consumerism while being a dwarf in technology.

Regards

On Wed, Nov 12, 2014 at 5:36 AM, Ali Hussein via kictanet <kictanet@lists.kictanet.or.ke> wrote:
Listers.

Interesting article. 

KITOS, hope you are listening...

Kenya has in the past few years showed promise of renewed innovative capacity, especially in the Information Communication Technology (ICT) sector.  

But the new tax regime precipitated by the East African Community (EAC) tax harmonisation is about to reverse all the gains we have made thus far. 

Read on 

http://www.nation.co.ke/oped/blogs/dot9/ndemo/-/2274486/2516562/-/1xv3f7z/-/index.html

Ali Hussein

+254 770 906375 / 0713 601113

Twitter: @AliHKassim

Skype: abu-jomo

LinkedIn: http://ke.linkedin.com/in/alihkassim

Blog: www.alyhussein.com

"I fear the day technology will surpass human interaction. The world will have a generation of idiots".  ~ Albert Einstein

Sent from my iPad

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