CORD MANIFESTO- MY THOUGHTS

Yesterday the CORD Alliance launched its manifesto at KICC to great pomp and glamour. I got a chance to go through the manifesto and though i feel its a nice document for campaigning, i feel it has some shortcomings which i will hilight as under.

Poverty and Cost of living:

Point three states that Cord will promote investment over consumption with measures favoring a combination of high- profit taxes and low interest rates. ( Emphasis mine)

This in my opinion is that CORD is seeking to increase taxes on corporates/companies and individuals with high profits/incomes. This will lead to reduced investments in the economy and lead to fewer companies setting up localy and hence no job creation. With the coming into force of regional markets with free movement of goods and labour, what will prevent  a company from setting up shop just across the border in Arusha and export finished goods to Kenya so as to avoid the high taxes.

The world over, no economy has ever developed through a regime of high taxes as this reduces the amount of disposable income thereby reducing investment and consumption which are the drivers of a growing economy. France recently increased taxes on high net worth individuals to 75% and this has seen the emigration of lots of people to countries with low tax rates.

Instead of raising taxes, CORD should focus on widening the tax base by roping in more companies and individuals who are evading and avoiding paying taxes by giving more teeth to the KRA, education on the importance of paying taxes and making tax evasion punitive.

Control Exchange Rates

While the aim of this policy is laudable ie. reducing the cost of imported goods, the method is flawed as active government intervention in exchange rates has seen the counties suffer from massive shocks as was seen in the Asian financial crisis when speculators crashed the financial markets of the Asian tigers.

To control the cost of imports, the government should endeavor to improve the quality of locally manufactured goods through empowering the Kenya Bureau Of Standards, giving incentives for local manufacturing, linkages of our universities and polytechnics with industries so as to produce graduates who are market ready and as for energy, promote the exploration of renewable energy and fast tracking of oil production and extraction so that they come online sooner.

Social Equality.

Design tax policies for redistribution of income and wealth by focusing on counties with limited capacity.

This point looks harmless but when taken together with other policy statements in the manifesto, it comes out that the CORD intends to use the poverty index of the counties to target tax increases that will hit some counties harder than others. The reason why i say this is that the constitution through the revenue allocation authority already has an equalisation fund and anything else is clearly meant to punish counties such as Kiambu for being rich.

I would also like the CORD alliance to define the methodology in everluating the richness/poverty of a county.

All in all, the CORD manifesto has a heavy socialist lean to it and will transform our country into a welfare state. While this is not entirely bad, they have not shown us how they intend to finance all the freebies and handouts apart from increasing taxes on the wealthy.