KRA’s tough call of raising Sh327bn in two months to June

The Kenya Revenue Authority (KRA) will need to raise Sh327 billion in two months to hit its tax collection targets for the ending June.

Figures published in the Kenya Gazette on Friday indicate that the taxman collected a total of Sh888.1 billion in the 10 months to April against a target Sh1.215 trillion for the financial year.

The performance translates to an average collection of Sh88.8 billion per month.

With only two months to the June 30 end of the current financial year, the taxman is likely to miss its full-year tax collection target given the shortfall of Sh327 billion or a monthly average of Sh163.5 billion.

This will pile pressure on the Treasury to deepen budget cuts or borrow more at a time when analysts have raised the alarm over the growing public debt.

The taxman missed its half -year tax collection target by a significant Sh47.6 billion, with the Treasury indicating that the shortfall mainly arose from a dip in payroll taxes and delayed application of the Excise Duty Act 2015.

The Treasury said by the end of December 2015 there was a huge shortfall in ordinary revenue collection made of a Sh26 billion deficit in Pay-As-You-Earn (PAYE) revenue and a Sh15.9 billion shortfall in Value Added Tax collection from imports.

READ: Tough times ahead as taxman misses half-year revenue target

The KRA has this year faced falling payroll taxes as a number of big employers reduce their staff citing higher financing costs and stiff competition from Chinese and Indian products.

The agency has also missed value added tax and excise duty collection targets due to slow activity in the corporate sector and a drop in imports.

Last month, the agency advertised for the position of a consultant to help seal loopholes and broaden the tax base in its efforts to boost collection without adjusting rates upwards.

The KRA has also undertaken a number of reforms, including the introduction of the iTax which allows for convenient electronic filing of returns from the comfort of one’s home or office, avoiding strenuous physical paperwork.

The financial statement published on Friday shows the government has also fallen short on its targets for non-tax levies and foreign financial support.

Over the 10-month period, the treasury stepped up its borrowing, mopping up Sh377.8 billion from the debt market or just 5 per cent below its target of Sh397.4 billion.

The data shows that Kenya’s public finances were further dented when the United Nations reimbursed only Sh4.29 billion for Kenya’s participation in the African Union Mission to Somalia. Kenya had presented a budget of Sh6.44 billion for the period.