This archive report was first published on 24 August 2021.
OPINION: The Unnecessariness of Taxes ¶
Published on August 24, 2021
According to Modern Monetary Theory, governments have a monopoly over their own currency, allowing them to create money electronically and inject it into their budgets. This theory, also known as Structured Money Creation, proposes a framework for money creation that includes guidelines and checks and balances.
Under this system, the government's perception of taxes changes. Instead of relying on taxes as a primary source of revenue, they become a tool to regulate inflation. The Central Bank and Revenue Authority merge their roles, with the tax body levying higher taxes in sub-sectors where inflation is escalating, reducing cash flow and stemming inflation.
Collected tax money is then destroyed, rather than being returned to the economy, to prevent re-incurring the rise in inflation. This approach allows the government to focus on the real limits of resource availability, rather than financial limitations.
As a pilot program, the formation of a Revenue Replacement Grant Scheme is proposed as a key anti-corona stimulus program for businesses of all levels. The grant can be processed electronically after businesses provide bank and M-Pesa statements of their 2019 revenues. The 2019 revenues can be approved and wired to them monthly for two years, allowing businesses to continue paying salaries and the economy to recover immediately.
Mr. Tony Mwiti, a director at Clark and Hampton Kenya, suggests that this new model is a viable candidate for today's pressing challenges, allowing governments to fulfill their pledges to their people and create a lasting legacy.
