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Taxman defies Covid blues to collect a record Sh122b in July

By Dominic Omondi | August 16th 2021

KRA Customs Trainer at the Kenya School of Revenue Administration Kimani Kangethe demonstrates the use of a Commodity Identification Kit donated by the US Government as Ambassador Kyle McCarter watches looks on.

The Kenya Revenue Authority (KRA) started well in the current financial year, netting Sh121.80 billion last month, according to a monthly report by the National Treasury.

This is an increase of almost a third from the Sh94.4 billion that the taxman collected in the first month of the financial year that ended on June 30, 2020, according to the Treasury’s statement on revenues and disbursement.

KRA surpassed its target for the first time eight years in the financial year 2020-21 collecting Sh1.669 trillion against a target of Sh1.652 trillion. This reflects an economy that might be recovering from the adverse effects of Covid-19.

It was the first time in eight years that the taxman had surpassed its revenue target, the last being in the 2013/14 financial year.

“This represents a performance rate of 101 per cent and revenue growth of 3.9 per cent compared to last financial year,” said KRA Commissioner General Githii Mburu in a statement.

Customs and Border Control collected Sh624.77 billion in the last financial year, surpassing its target of Sh606 billion by Sh18 billion. Churchill Ogutu, the head of research at Genghis Capital, an investment bank, noted that July was an outlier in terms of the tax receipts attained. “My view is the momentum that we’ve seen since the start of the year with tax receipts coupled with the heightened tax administrative measures shored up the tax collections last month,” said Ogutu.

In the period under review, domestic borrowing, which is increasingly becoming the government’s preferred debt stream was estimated at Sh119.7 billion. In total, the government’s account at the Central Bank had Sh267.1 billion, including an opening balance of Sh21.3 billion.

The State took up a big chunk of this cash, with Sh71.2 billion going into recurrent expenditure such as wages, hospitality, maintenance of cars and so forth. Consolidated Fund, which includes debt repayment, pension and salaries for constitutional office holders reached Sh99.2 billion.

No cash went into development projects and counties last month. The government expects to spend Sh3.2 trillion by end of June next year in what is aimed at reviving the economy from the after-shocks of the pandemic.

Last month, CBK noted that Kenya’s economy had shaken off the adverse effects of Covid-19 to post recovery in the first half of the year, a situation that might explain good tax performance.

CBK said the rebound was supported mainly by the strong performance of construction, information and communication, education and real estate sectors, with the taxman meeting its tax collection target for the financial year that ended in June.

“The economy is expected to rebound in 2021, supported by the continued reopening of the services sectors including education, recovery in manufacturing, and stronger global demand,” said the Monetary Policy Committee, CBK’s highest decision-making organ.

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