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Seal tax leakages instead of raising taxes, Mbadi tells KRA

BUSINESS
By Mireri Junior | June 10th 2021

Suba South MP and Minority Leader in the National Assembly John Mbadi outside Parliament buildings, Nairobi. He has cautioned KRA against taxing basic commodities. [File, Standard]

Minority Leader in the National Assembly John Mbadi has cautioned Kenya Revenue Authority (KRA) against raising taxes, saying the move will hurt ordinary Kenyans. 

Speaking to KTN News on June 10 ahead of the 2021-2022 budget reading, Mbadi said the tax collector should instead seal the tax leakages to realise more revenues.

He said KRA’s ordinary revenue projection of Sh1.776 trillion can be collected within the current tax regime if more measures were put in place to collect and manage the taxes.

“With proper tax management and collection, the country will collect in ordinary revenue the projected Sh1.776 trillion within the current tax regime,” he said.

The lawmaker said KRA can collect the proposed revenues without increasing taxes, adding that the country collected Sh1.734 trillion last year despite the Covid-19 pandemic.

The Suba South MP said the proposed taxation to increase taxes on basic commodities, VAT and motorbikes will hurt the ordinary Kenyans and should be revised.

Mbadi said the Finance Committee and Parliament will have to stop increased taxation essentials items to cushion Kenyans against the effect of the Covid-19 pandemic.

To reduce Kenya’s public debt burden which is estimated at 69.6% of GDP as of December 2020, KRA could introduce a raft of amendments that are aimed at widening the tax base.

He said the only factors that can affect revenue collection include the fourth wave of Covid-19, adverse weather and political uncertainty because of the 2022 General Election.

However, Centre for Fiscal Affairs executive director Duncan Otieno, said despite MPs having powers to veto the tax amendments, chances are they will change nothing because of the reality on the ground.

He said the projected ordinary revenues of Sh1.776 trillion and with a bigger chunk going into payment of public debts leaves the government with no option but to borrow or raise taxes.

"Out of the Sh1.776 trillion, Sh1.17 trillion will go to payment of public debts with the rest, not even enough to foot our wage bills," he said.

Otieno said the biggest problem with the country is the lack of fiscal discipline and the appetite to spend what we don’t have.

“Why come up with a huge budget when in reality to cannot raise enough revenues to fund it?” he posed.

He said the government should rethink some of the major infrastructure projects such as the SGR and the Nairobi Express Way gobbling funds but don’t help the economy directly.

 KRA is projecting a total Sh2.039 trillion total revenue projection for 2021-2022 out of this Sh1.776 trillion is ordinary revenue projection.

According to KRA, collections for the month of April 2021 increased by 22.6 per cent to Sh176.7 billion compared to Sh144.1 billion in April 2020.

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