Politicians and analysts have taken up the increasing use of mobile money services in Kenya’s informal sector as a potential entry point to taxing small-scale businesses that usually fly under the radar of local tax authorities. Along these lines, the Finance Act 2023 proposed, among several other tax increases, to raise the excise duty tax on mobile money services from 12 to 15 per cent, resulting in increased fees for customers. Our research investigates ordinary citizens’ reaction to this change in taxation through ethnographic fieldwork, in-depth interviews and focus group discussions, as well as an analysis of newspaper articles and (social) media reports.
We examine 1) how taxes on mobile money services relate to other taxes and other obligatory payments made by social actors, and 2) how the perception of taxation more generally impacts citizens’ assessment of individual taxes and vice versa. Our data shows that the overall anti-tax sentiment that was partly stirred by the political opposition resulted in citizens avoiding paying taxes by employing a variety of ‘fiscal workarounds’. Across the political-economic spectrum, our research participants thereby expressed their frustration with the political class while at the same time reinvigorating their view of taxation as based on a ‘social contract’ between tax-compliant citizens and a government that provides essential services.
Summary of Working Paper 211.
