[Continued from Kenya's Tax History I]

The Portuguese arrived at the Kenyan coast and were now taking over from the Arabs. You wont believe this; The first recorded treaty that involved a form of taxation in this period was in 1502. The then Sultan Ibrahim of Malindi was held against his wishes and forced to accept defeat. While being held hostage during negotiations on Vasco da Gamma’s boat, a treaty of surrender was signed with Portugal for an annual tribute of 1,500 meticals of gold.

However, the Portuguese were violent and thus this led to a complete failure to use equity in the creation and levy of  taxes there were riots (you thought riots started the other day?) were punctuated with civil disobedience and widespread cases of tax  evasion and avoidance.

By the end of the rule of the Arabs and Portuguese along the East coast  of Africa the existing balance of taxation that was inherited by the British  included a capitation tax payable per head of slave exported and customs revenue shared equally between the Arabs and Portuguese. The tax base  was, however, limited to traders only.

Exit Portuguese and Arabs, Enter The British 

Next were the British who ruled what is presently Kenya and Uganda together to form British East Africa Protectorate.  British colonial tax policy developed mostly on the grounds that Britain needed to support its own economy  by creating foreign markets and sources of raw materials for its industries, thus obtain maximum gains with minimum input. This was done by  initially through the Chartered company concept. However, later in order  to encourage rule from within the territory to make it viable after the accidental discovery of arable land in Kenya.

British Taxes

Hut and Poll Tax: The 1901 Hut Tax Regulation imposed a tax of one rupee, payable in kind or  through labour, upon every native hut in British East Africa. Hut tax or poll  tax was increased to 5 rupees in 1915 and again in 1920 to 8 Rupees.

Land Tax:  The levying of  a graduated land tax on individual holdings was introduced by the British as a sound basis for land policy in East Africa. The protectorate government in East Africa argued in early 1908 for  preserving the means of obtaining some share of any future appreciation  in the value of the land, particularly because much of the land acquired by settlers was not being developed.

 Graduated Personal Tax: The Graduated Personal Tax was introduced in 1933. The Act was modeled  on the Colonial Income Tax Ordinance which itself was a ‘simplified  synthesis’ of the United Kingdom Income Tax Act of 1920. Now graduated  taxes on global income would have been considered revolutionary because  non-Africans were liable to a fl at poll rate and an Educational Tax. This tax  was applied for the fi rst time in 1934 at rates graduated according to the  taxpayer’s income with certain amendments.

Income tax: It was first introduced in Kenya in 1921, and  in 1954, the rates of personal income tax were set at 20 shillings for anyone  earning less than £60, for earnings between £ 60- 120 charge of 40 shillings and  for earnings over £120 a charge of 60 Shillings. In 1956, a Commission of Enquiry  into the Administration of Income was established and was chaired by Sir Erick Coates.

The next piece, Kenya's Tax History III will cover Taxation in Kenya after independence, 1963 up to date.

Reference: Kenya Law Review: Taxation Without Principles