How far does Sh5 billion go? Start by collecting taxes

HOW AM I supposed to answer a question like: “What is Sh5 billion?” Isn’t the answer simply Sh5 billion? The e-mail from Peter reminded me of a similar question that my younger brother used to ask me many decades ago when he was learning to speak: “Mungai; what is your name?” Of course the answer is “Mungai”!

Peter goes on to write that “Sh5 billion is 5 million notes of Sh1,000 each. [Since a] Sh1,000 note is about 15cm long, if you arrange Sh5bn notes side by side, they will cover a distance of 750km. [Also,] if you spend Sh100,000 daily, it will take you 138 years to finish Sh5bn. Is this true?”

Well, Peter, you tell me if it is true.

I suspect that Peter was prompted by the on-going parliamentary investigation into the financial affairs at the Ministry of Health and the National Youth Service. I first wrote along these lines of thought in the early days of this column – 2003.

At that time, Parliament was investigating the infamous Goldenberg affair that had happened 10 years earlier. It seems that the only improvement we have made is in how quickly the august House begins its inquiry!

ACRES OF MONEY

Nevertheless, in 2003, I demonstrated that, if one billion shilling in Sh1,000 notes was laid down on flat, level ground, the money would carpet three acres of land! So, Peter’s Sh5bn should easily cover 15 acres. Mind-boggling, isn’t it?

Perhaps I should add that if the money was arranged across the tarmacked section of a road, about 100 notes would fit from side to side. So, the Sh5bn would carpet about 7.5km…it gives a new meaning to re-carpeting of roads!

For me, though, the troubling outcome from the current proceedings in Parliament is that one of the witnesses/suspects admitted under oath that she received payments totalling about Sh1.67bn for various contracts and did not pay any taxes. Indeed, she went further to say that she has never filed any tax returns!

I don’t know what the Kenya Revenue Authority is waiting for: they should immediately go and audit her for tax purposes! Assuming that her supplies business operates with a reasonable profit margin of 30 per cent, it turns out that she netted about Sh500 million before taxation.

Applying the normal tax rate of 30 per cent, I think she owes us at least Sh150 million in unpaid taxes. We should add penalties for failure to file returns (5 per cent of tax due = Sh7.5 million) and interest at the rate of 2 per cent per month from the date the taxes were due (30th April 2016).

The interest comes to Sh3 million per month, or Sh18 million in total for the six months that have elapsed so far. Altogether, she owes at least Sh175 million. After collecting this money, we can then throw her in prison for six months for failure to furnish a return on income!