Taxman anticipates dip in revenue collections, again

Members of the public queue outside the Kenya Revenue Authority office in Nyeri to file their iTax returns

For the second time this year, the National Treasury has been asked to lower tax expectations.

The Kenya Revenue Authority (KRA) said it expected another revenue shortfall.

In the Kenya Gazette published last Friday, Treasury revised tax estimates to Sh1.415 trillion even as actual collections up to May summed up to Sh1.17 trillion, with one month to go.

In January, the taxman requested that the State reduce targets from Sh1.49 trillion to Sh1.439. This turned to be too ambitious.

While projecting revenues for the second year at Sh1.7 trillion in taxes, Treasury seemed to be disconnected from reality, and this has worried experts.

“Over the past couple of years, our recurrent budget has overshot revenues over 100 per cent,” said Institute of Economic Affairs Progammes Coordinator John Mutua.

He added that last year’s recurrent spending was over 150 per cent of tax revenues. In 2016, it was about 130 per cent.

In 2014 and 2015, regular expenses of running State bureaucracy were above 140 per cent. This means the country has to depend on grants, fees and fines or debt to meet basic spending.

While grants and appropriation in aid are not guaranteed, Treasury has to borrow more cash, worsening the huge debt burden.

 Crackdown on counterfeits

This is also an indication that Kenya has inadequate cash to spend on development from tax receipts.

While Treasury insists that administrative reforms will help KRA net more taxes, the current shortfall shows that Treasury Cabinet Secretary Henry Rotich could be ‘milking a stone'.