Taxation and Development in a Global Economy -laying a Basis for Tax Reforms in Kenya

Abstract

This dissertation focuses on the relationship between taxation and development on the one hand, and the challenges posed to both taxation and development, by globalization, on the other hand. It starts by rejecting the narrow economic conceptions of development - which equate development with such things as GDP growth, modernization etc - and re-conceptualises development in terms that identifies it with the realization of substantive freedoms and the achievement of social justice, before concluding that the conception of development which is relevant to Africa in general and Kenya in particular is a communitarian conception. It then considers the capacity of the free market paradigm to facilitate the realization of development in its communitarian sense and concludes that since free market paradigm has a tendency to exacerbate rather than eradicate poverty and inequalities, there is need to shift from free market paradigm to a human rights paradigm. The success of human rights paradigm, however, rests upon two fundamental pillars: taxation and an autonomous state - both of which are, however, threatened by globalization. The quest for development therefore translates into a quest for appropriate response to globalization. It concludes that since no state can avoid or reverse globalization, the only option for states to effectively manage globalization is by minimizing its negative impacts while at the same time maximizing its positive impacts, through innovative tax reforms. These issues are then considered in the context of Kenya and a finding is made that although Kenya has the appropriate normative and institutional framework for the application of human rights paradigm, it lacks the two indispensable pillars discussed above. This is because it has succumbed to global governance and has, as a consequence, reformed its tax system to facilitate globalization - in the interests of the West while lacking the autonomy to reform the said tax system to minimize the negative impacts of globalization (or to take advantage of its positive impacts) in its best interests. This dissertation therefore recommends appropriate tax reforms that would enable Kenya to manage the global economy in the interests of its own development.