Taxman must tighten the system to net tax cheats, grow revenue

The Auditor General Edward Ouko has come up with yet another damning report indicting the country’s financial probity. His latest report has unearthed a Sh17 billion hole at the Kenya Revenue Authority (KRA) in collected taxes. The audit report, published in November 2017, indicates that the money was never handed over to the National Treasury. This raises serious questions over KRA’s capacity to ensure adequate taxes are collected to enable the Government fund critical services such as security, education and health. Receipts from most revenue streams were grossly understated, according to the audit covering 2016, but whose compilation was completed in November, last year. Every penny collected by KRA must be accounted for, if we are to free ourselves from the national debts. Unfortunately, the audit shows that unethical individuals at Times Tower might have connived with fraudulent taxpayers to defraud the Government of billions of shillings in tax revenues.

For example, by the time the Auditor General was publishing the report, large firms owed KRA over Sh4.4 billion in tax debts. In some cases, some tax obligations were reduced under unclear circumstances. The Auditor General was also concerned by the manner in which the tax authority dragged its feet on certain delayed tax obligations. The audit showed that some companies indicated nil returns even when they had made billions in sales. One of the largest taxpayers in the country over-declared purchases thus denying the taxman a cool Sh724.6 million in value-added tax (VAT) and corporation taxes. At a time when the country’s financial situation is so dire that National Treasury Cabinet Secretary Henry Rotich has hinted that we are broke (he later said he had been misquoted), KRA must come clean on these anomalies. Moreover, the taxman must demonstrate that he has teeth to bite firms whose accountants help them evade tax obligations. KRA should confirm to the public whether or not they have since collected all the tax debts. Failure to do so will water down any excuse of not meeting their tax targets.