Cash misuse masks high tax collection

African Development Bank Group Vice President Janvier K. Litse(left) and President of African Development Bank Group Dr. Donald P. Kaberuka address the press at Hilton Hotel on Thursday,June 25th, 2015. [PHOTO/ANGELA MAINA].

 

Kenya’s tax collection is one of the highest in the continent even as the Kenya Revenue Authority attempts to raise the amount through taxpayer intimidation.

According to a former African Development Bank (AfDB) president, Donald Kaberuka, the country’s revenue collection as a ratio of gross domestic product (GDP) is 21 per cent against the continental average of 15 per cent.

“Kenya is doing extremely well in terms of revenue collection, if you compare the country to its peers in Africa.

“In Nigeria, for example, if you remove oil from their entire economic equation, you will realise that their normal revenue collection from the taxpayers as a ratio to their GDP is seven per cent,” he said.

Tax-compliant

KRA recently embarked on a campaign to get more Kenyans to be tax-compliant in an effort to hit its targets.

Last month, the taxman issued a threat to taxpayers who had not registered theirpersonal identification numbers (PINs) on the iTax system that their PINs would be deactivated.

Some businesses subsequently had their PINs deactivated on August 31.

This is despite tax law experts arguing that KRA has no legal mandate to deactivate a citizen’s PIN.

Data from the National Treasury shows that total tax income grew by Sh9 billion to reach Sh187 billion last year, up from Sh178 billion last year, while non-tax income has dropped to Sh1.9 billion from Sh3 billion.

Dr Kaberuka, who was also once Rwanda’s finance minister, was giving a public lecture in Nairobi organised by KRA dubbed, ‘Public Revenue Mobilisation in Developing Countries: Can Africa stand on its own?’ 

Public finance

He said the biggest challenge Kenya is facing is the Government’s public finance management. He alluded to unnecessary consumption and a penchant for unnecessary political posts that create a bloated government.