KRA Should Fasten Its Tax Collection System for Optimal Performance
By Desmond Boi
| September 21st 2018
Kenya’s economy is still dangling on the balance in terms of its financial stability and independence, thanks to the increasing foreign debt and the strain the Kenyan taxman faces to hit revenue collection targets.
We are having a delightfully ambitious government that has rightly drawn focus to build on a blueprint now well known as the big four comprising: Food security, affordable housing, manufacturing and affordable healthcare.
Plausible and tenable as these could be, it is going to be difficult to attain them if at all there are not enough funds to run their implementation. As a matter fact, we might remain in the realm of accumulating debt to leverage our budget year in year out, if revenue collections are not optimally met.
Consequently, the Kenya Revenue Authority, which is mandated to account for 95 percent of the government’s ordinary revenues, would want to make its system more efficient than ever before to see to it that the government is not deprived of an opportunity to collect revenues to support its programs and projects.
A research on tax compliance attitude in the Afro-barometer Journal asserted that if individuals perceive it to be difficult to evade tax in a country’s tax system, they are more likely to have a tax compliant attitude. That’s to imply that, effectively, the manner of identifying eligible taxpayers, system of collecting and filing those tax returns and dealing with frauds related to tax compliance becomes fair and rigorous.
Against the backdrop of foreign debt hitting the Sh5 trillion mark mid-2018 after the issuance of the Sh202 billion Eurobond in February this year, revenue collection ought to be meticulous to avoid the unnecessary missing to hit targets.
It is a controllable anticipation, unfortunately, that comes at a time when the payroll tax is set to pull down revenue collection owing to the PAYE reforms initiated last year and shrunk recruitment in the current fiscal year due to election turmoil as well as the court order put forth by the High Court to suspend excise duty collection planned by KRA on non-alcoholic drinks and cosmetic manufacturers.
Part of the Auditor General’s report indicated that major companies had either failed or avoided paying taxes in some form, principally on grounds that KRA could have controlled it had it deployed the right measures and had scrupulous and ethical staff. At the top of the assertions by that report, as a reason to the eventuality, is the annoying and seemingly inherent outright collusion between KRA staff and fraudulent accountants in companies that unlawfully avoided paying tax.
Effectively, these reports from the authority’s staff, of which it’s never clear how they are dealt with after committing such unbefitting and negligent acts, undermines KRA’s moral authority and trust to go after citizens determined to avoid paying taxes. Further, it downplays efforts by any other body or by the authority itself to promote the need for the citizens to gleefully pay their taxes to the government with an understanding that their taxes will be handled well and utilized optimally for their benefit.
It is therefore imperative that KRA understands its vital role in sustaining a conducive business environment and providing the capacity for the government to be able to run its programs seamlessly. As it is stipulated in the Authority’s Sixth Plan, 2015/2016 – 2017/2018, enhancing trade facilitation, supporting regional integration and improving border security were among the priority areas of this three-year plan
In the report, there were cases of imports of sugar which did not bear authenticated certificates of origin and sugar import permits issued by the Kenya Sugar Board. This is one instance that the tepid tax collection strategy by the taxman, as described by the report, hurts the economy rather than protect its prospects of growth. On this occasion, for instance, the indifferent conduct by the authority saw importation of sugar to the country exceed the authorized quota from the East African Community (EAC). It left our dying sugar industry to grapple with the cheap imported sugar, and a loss of import duty to the government.
Ultimately, the authority would want to venture further on the big data and advanced analysis space, sternly respond to corrupt officials within the system and embrace an all-inclusive tax collection strategy in order to fasten the whole process.
The country begs for a stronger, protective and transparent tax payment process that would be able to set stage for a revamp in the building of a formidably growing economy in the region and KRA should be ready to deliver on that premise.
Mr Boi is a Monitoring and Evaluation [email protected]
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