Kenya’s Sh1.7 trillion tax plan faulted

Market analysts have differed on whether Kenyans’ pockets are deep enough to foot half of the Sh2.6 trillion budget.

National Treasury estimates that it can raise Sh1.7 trillion in revenue, with the rest of the money to be sourced through debt and grants from international partners.

Trade analysts at Genghis Capital say the plan is too ambitious, given that the economy is expected to grow at a slower pace of between 4.75 per cent and 5.25 per cent this year owing to election jitters, prolonged drought and the after-effects of the interest rates cap.

Lagged collection

Genghis Capital Chief Executive Geoffrey Gangla said the targeted Sh1.7 trillion revenue collection in the next financial year is ambitious.

“The current financial year’s half-year data already shows lagged collection,” he said.

However, Francis Kamau, a tax partner at audit firm EY, said Kenya Revenue Authority (KRA) can collect up to Sh2.3 trillion if it widens its tax base to loop in more payers. “Only four million people are paying taxes in a country with 18 million voters,” said Mr Kamau, adding that KRA should register births and deaths to have a clearer picture of potential tax payers.