Githae targets Sh40b in new tax measure

By John Oyuke

Kenyans face additional taxes and major spending cuts as Government seeks to raise cash for the recent salary increases for teachers, lecturers and health workers.

Announcing the radical tax proposals that would have a direct impact on money transfers and sale of properties, besides fees charged on oil and gas exploration, Finance minister Robison Githae hopes to raise Sh40 billion to bridge the expenditure deficit.

The harsh reality is beginning to sink in with the just-concluded pay deal for teachers, lecturers and health workers together with security interventions in Somalia and implementation of the Constitution.

Treasury also plans to undertake spending cuts and sealing of loopholes in revenue collection to supplement its tight cash position.

Githae said the rationalisation of recurrent and development expenditures and austerity measures across board in non-priority areas is expected to raise the funding needed to cover a gap of Sh12.5 billion.

Githae told a news conference yesterday that the recent wage awards to teachers, lectures and health workers to cost the exchequer close to Sh25.5 billion. Other revenue raising measures would cover Value Added Tax, excise taxes and international trade related taxes.

He said Treasury had opted for expenditure cuts, new tax raising measures in addition to tax administrative measures to seal loopholes in revenue collection. 

It, however, rejected increasing borrowing from the domestic market and raising of general tax rates on income tax, Pay as You Earn and VAT, which could have negative bearing on the economy.

“After a review and taking into account the obtaining economic situation and our development agenda, I find no scope in raising taxes, especially at this time of economic hardship,” he said in office yesterday.

 Githae expressed confidence of raising part the much-needed revenue through enhanced tax administration and new tax raising measures, observing that most Kenyans do not pay their taxes, while others are doing whatever is possible to minimise their tax liabilities.

“Henceforth, Kenya Revenue Authority’s ability to enforce our tax laws will be stepped up to recoup loss in revenue in the first quarter and enhance revenue collection on a sustained basis going forward,” he said.

He disclosed Treasury has enhanced fund to KRA to enable it invest in technology and skill upgrading, saying the taxman has been allocated additional Sh1.5 billion toward administrative capacity building in this fiscal year.