How far does Sh5 go? Start by collecting taxes!
By MUNGAI KIHANYA
The Sunday Nation
Nairobi,
20 November 2016
How am I supposed to answer a question like: “What is Sh5 billion?”
Isn’t the answer simply Sh5 billion? The email from Peter reminded me of
a similar question that my kid brother used to ask me many decades ago
when he was learning to speak: “Mungai; what is your name?” Of course
the answer is “Mungai”!
Peter goes on to write that “Sh5 billion is 5 million notes of Sh1,000
each. [Since a] Sh1,000 note is about 15cm long, if you arrange Sh5bn
notes side by side, they will cover a distance of 750km. [Also,] if you
spend Sh100,000 daily, it will take you 138 years to finish Sh5bn. Is
this true?”
Well, Peter, you tell me if it is true.
I suspect that Peter was prompted by the on-going parliamentary
investigation into the financial affairs at the Ministry of Health and
the National Youth Service. I first wrote along these lines of thought
in the early days of this column – 2003. At that time, parliament was
investigating the infamous Goldenberg affair that had happened ten years
earlier. It seems that the only improvement we have made is in how
quickly the august house begins its inquiry!
Nevertheless, in 2003, I demonstrated that, if one billion shilling in
Sh1,000 notes was laid down on flat, level ground, the money would
carpet three acres of land! So, Peter’s Sh5bn should easily cover 15
acres. Mind-boggling, isn’t it?
Perhaps I should add that if the money was arranged across the tarmacked
section of a road, about 100 notes would fit from side to side. So, the
Sh5bn would carpet about 7.5km…it gives a new meaning to re-carpeting of
roads!
For me, though, the troubling outcome from the current proceedings in
parliament is that one of the witnesses/suspects admitted under oath
that she received payments totalling about Sh1.67bn for various
contracts and did not pay any taxes. Indeed, she went further to say
that she has never filed any tax returns!
I don’t know what the Kenya revenue Authority is waiting for: they
should immediately go and audit her for tax purposes! Assuming that her
supplies business operates with a reasonable profit margin of 30 per
cent, it turns out that she netted about Sh500 million before taxation.
Applying the normal tax rate of 30 per cent, I think she owes us at
least Sh150 million in unpaid taxes. We should add penalties for failure
to file returns (5 per cent of tax due = Sh7.5 million) and interest at
the rate of 2 per cent per month from the date the taxes were due (30th
April 2016).
The interest comes to Sh3 million per month, or Sh18 million in total
for the six months that have elapsed so far. Altogether, she owes at
least Sh175m. After collecting this money, we can then throw her in
prison for six month for failure to furnish a return of income!
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