Spare Kenyans pain of heavier tax burden

For KRA to raise that revenue, the government needs to expand the tax base and by a huge percentage. [Denish Ochieng, Standard]

The Treasury has released its Budget Review and Outlook Paper. It is a guide on how the government plans to raise money and spend it in the next financial year. In the 2023-2024 projection, the Treasury plans to spend a whopping Sh3.64 trillion. This is 10 per cent higher than the previous budget.

In the forecast, the Treasury says of the amount, Sh2.42 trillion will be spent on the recurrent budget and Sh796.4 billion will go to development. All these looks good but the projections on revenue collection is where the majority Kenyans will be pushed to cough up more. The Treasury has increased the targets for the Kenya Revenue Authority by 27 per cent.

KRA will have to collect Sh2.57 trillion, up from Sh2.03 trillion. The rest of the amount will come from borrowing with a huge chunk from the domestic market. For KRA to raise that revenue, the government needs to expand the tax base and by a huge percentage. Failure to expand the base would mean increasing taxes for those already paying. As things stand, a paltry 10 per cent or 5 million Kenyans shoulder the taxation burden.

This group has been facing tough times since the advent of the Covid-19 pandemic. Many taxpayers are yet to recover from the shocks experienced over the nearly two years of turmoil. Businesses have shut down and many of those still in operation are on their knees as employers have had to scale down production and slash salaries in some instances. It will therefore be a tall order to expect this group to raise an extra Sh300 billion from their ailing businesses.

And it gets worse with the tough conditions the Bretton Woods institutions have given for the country to access loans. Restructuring parastatals and civil service will mean job losses and suppressed incomes. The cost of living is getting unaffordable for many families and taking the little income in the name of taxation is impoverishing an already improvised lot. Treasury mandarins should come up with better ways of raising revenue and spare Kenyans more pain in the next budget cycle.