Chapter Two

Finance Policy

FORD-KENYA believes in a simple tax with a low rate structure and a wider and yet is flexible. This will be guided by principles of:

1. Equity, fair and reasonable allocation of taxes

2. Economic efficiency, taxes that advance employment, economic growth and stability, by granting incentives to investors

3. Administrative feasibility, taxes that are easy to administer at reasonable fiscal costs

4. Simplicity, ability for tax payers to understand and comply

5. Certain, ability for tax payers to verify their status

6. Revenue productivity and elasticity, taxes that are highly elastic generating sufficient revenue

FORD-KENYA will have an appropriate level and structure of taxation and tax policy that will contribute to growth – oriented adjustments.

We will strive for a tax system that:

1. Raises revenue from a limited number of taxes

2. Broad and with objectively defined tax bases

3. Has minimal collection lags

4. Low rates

5. Enforces severe penalties for payment delays

6. Is as neutral as possible

7. Has substantial reduction of administration and compliance costs

We believe that it is more equitable to tax what is taken out of the economic system as consumption, rather than contributions in the form of income.