Wednesday, 30 May 2012

Taxation and Markets for Labour in Colonial Kenya

Taxation was widely used as a policy instrument to regulate the labour market not only in Kenya but also throughout the British Colonial Empire. The use of taxation in Kenya for the purposes of releasing labour from the subsistence sector became particularly pronounced after the First World War in 1918. As a result of
massive loss of life in combat, labour shortages for the settler farmers became markedly acute.

It is important to note that the adoption of the use of taxation in regulating the labour market was not without debate. The colonial state was caught up in the process of trying to be responsive to the demands of the settler farmers but at the same time eschew the possibility of alienating the natives any further. While the natives were expected to pay taxes as part of their obligations to the colonial state, the settler farmers lobbied for a calculated increase in the level of taxes with the intention of attracting them to their farms as wage labourers.

They could, alternatively, have attracted additional labour by offering attractive wages. This avenue was not favoured at all on the pretext that the labour market was essentially characterised by a backward bending supply curve. The argument was that an increase in wages would not necessarily be associated with an increased labour supply since the natives had limited pressing cash needs except paying tax. Increasing tax levies was, therefore, the only option. It would escalate the cost of living beyond their means of subsistence, and hence force the natives to migrate in search for wage employment on settler farms.

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