Confusion or Desperation - or Both

The Business Daily has an interesting story on the proposed increase in taxes on bank charges. The author of the story, Brian Ngugi, is my friend. He is hard working and often seeks my views on topical issues when he believes that my opinion will add value.

On this one, which masquerades as an analytical piece, he makes three core assertions.

1. That “banks have said they will pass on the additional taxes to customers”. This is trivia. This is a tax on the service so banks are merely collecting it on behalf of the Kenya Revenue Authority.

I thought this should be obvious to a guy who is indicated to be reporting on business and economics.

2. That “this new tax will also affect stockbrokers, fund managers and insurances firms that charge fees for their services”. Actually not; it affects the consumers, not service providers. This is a consumption tax. I thought this should be obvious too. Oh, and these other financial service providers are mentioned just as a by-the-way. 

The core story is about bank  charges and interest rate caps, two aspects that are not at all linked to the tax. But hey, this is the favorite of reporters and editorial writers, whose pretense to expertise on the subject,  is manifest in as many contradicting arguments as the number of stories/editorials that have read over the past two years. 

3. That tax amounts to increase in fees and commissions, which will go to boost bank profits. This is nonsense. See No 1 above.

In the same issue of the newspaper, Brian has another piece on the proposed new tax on mobile money transfer (it is actually not on Mpesa alone as the caption in the story erroneously screams). He correctly sees this as a pain to the consumers (see its equivalence to No 1 above). He does not see this as a possible increase in fees for the benefit of mobile network operators.

This begs the question: how can a guy get it wrong and right on the same subject in the same newspaper on the same day? 

This is either confusion or desperation, or both.