Taxman wants bigger budget to collect more
By Otiato Guguyu and Moses Omusolo | January 17th 2019
The Kenya Revenue Authority (KRA) wants the Government to guarantee it an allocation of at least Sh103.69 billion to enable the taxman to grow incomes by 12 per cent over the next three years.
KRA said yesterday that were this to happen, it would be able to raise Sh58.8 billion, raking in Sh6.1 trillion by 2021.
“The Government has got ambitious plans to invest in other areas so naturally we are competing for resources. We may not get to a level of where we want, but we have reached a level of understanding of how we should prioritise allocation to KRA and look for a way KRA funding can be ring-fenced because we are at the beginning of the process so if things do not work here they do not work for the country,” said Commissioner-General John Njiraini during the launch of KRA’s seventh Corporate Plan in Nairobi.
"It is important that resourcing for us is properly handled,” he added.
Kenya has in recent years spent trillions of shillings of its revenues on debt repayment, with the economy growing at an average of 5.5 per cent even as tax collection has declined.
The World Bank in its 16th edition of Kenya Economic Update noted that even though more goods and services have been traded, very little of these economic activities have been taxed even with KRA enhancing compliance.
“Although it (revenues) grew by 13.3 per cent in nominal terms in 16/17, tax revenues expanded by less than nominal GDP 14.9 per cent, hence the tax-to-GDP ratio fell to 16.9 per cent of GDP—its lowest level in a decade,” said the World Bank.
KRA said it could reverse the trend from the current 18.3 per cent in 2017/18 to 19.2 per cent in 2020/21 from exchequer revenues, Road Maintenance Levy Fund and Railway Development Levy.
This will be achieved by doubling the number of Kenyans who pay taxes from 3.94 million to seven million by implementing a segmented approach to deal with the identified sectors.
But National Treasury Cabinet Secretary Henry Rotich in a speech read by Treasury’s Chief Administrative Secretary Nelson Gaichuhie complained that despite the investment in KRA, it was still unable to hit targets set by his ministry, making the Government to borrow to bridge the budget deficit.
“While KRA had done well to come up with strategies and programmes that seek to enable it achieve its ambitious targets, it was not paying enough attention to many loopholes that exist in the system which have consistently been denying the taxman the opportunity to meet its revenue collection targets,” said Rotich.
Mr Njiraini, however, blamed the shortfall that has seen the taxman collect only Sh555.6 billion against a revised target of Sh1.6 trillion (initially Sh1.69 trillion) this year on dashed hopes that the economy would pick up after the elections.
“We had a couple of issue that negatively impacted those indicators, for example, banking, which is a very critical player in tax performance, did not do well,” he said.
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