The half-year tax collections were Sh79.5 billion higher than the Sh544.2 billion booked in a similar period a year earlier.
The Kenyan economy is currently grappling with a wave of job cuts, especially in the financial services sector.
Income tax is the taxman’s single largest revenue source and the retrenchments have dampened collection prospects.
The taxman missed revenue collection target by Sh20.1 billion in the half-year period to December, weakened by a sluggish growth in payroll tax collections.
Treasury documents indicate that Kenya Revenue Authority (KRA) raised Sh623.7 billion from taxes against a target of Sh643.8 billion.
The half-year tax collections were Sh79.5 billion higher than the Sh544.2 billion booked in a similar period a year earlier.
The shortfall comes as the Treasury battles with a growing expenditures in a year when Kenyans go to the polls in August.
Treasury data show that pay-as-you-earn (PAYE) tax collections were furthest from the set target with Sh144 billion raised against Sh161.5 billion.
This represents a below target performance of Sh17.4 billion and signals that policymakers’ forecast for jobs growth underperformed in a corporate market where employers are looking at cost control to grow profits.
It also suggests that employers failed to raise salaries as projected by the Treasury.
The Kenyan economy is currently grappling with a wave of job cuts, especially in the financial services sector.
Multiple banks are downsizing including Bank of Africa, Standard Chartered, Ecobank, Family Bank, Sidian, and lately KCB Bank against the backdrop of an era of interest rate ceilings.
Income tax is the taxman’s single largest revenue source and the retrenchments have dampened collection prospects.
At Sh144 billion, the PAYE collection accounts for nearly a quarter of total tax receipts. VAT on local product came second with Sh91.9 billion and surpassed the taxman’s target by Sh7.2 billion.
VAT on imports missed the target by Sh10 billion at Sh68.5 billion.
Collections from excise duty on manufactured products, also overshot the government’s target by Sh2 billion at Sh81.6 billion.
This is attributed to last June’s introduction of a 10 per cent excise duty on cosmetic products that were previously tax exempt, forcing women to pay more for the beauty products.
The Kenyan cosmetic industry is estimated to be worth over Sh8 billion.
PAYE Tax Calculator
Note: The results are not exact but very close to the actual.
