KRA mulls pay increase in tax evasion battle

A clerk receives tax returns from taxpayers filing their annual returns outside KRA headquarters in Nairobi. The taxman is recommending a host of changes  including an increase of staff salaries to boost their morale.  File
A clerk receives tax returns from taxpayers filing their annual returns outside KRA headquarters in Nairobi. The taxman is recommending a host of changes including an increase of staff salaries to boost their morale. File 

Robust performance by the Kenya Revenue Authority in its October-December 2009 quarter has put the taxman on the first lane in its bid to meet the Sh635.5 billion target for 2010/2011 which only recently looked like a distant dream following a period of dismal revenue collections in 2008 and 2009.

KRA, in its corporate plan for 2009-2012 is recommending a host of reforms including a salary raise for its more than 4000 workers and the restructuring of its various departments and field offices so as to increase revenue collection.

The institution has blamed corruption by its employees as one of the reasons for not meeting targets previously but now hopes improved terms of service will help it attract high calibre staff that will work towards meeting targets.

The taxman collected Sh136.8 billion against a target of Sh134.3 billion in the October-December 2009 period, the institution’s second quarter of the fiscal year 2009/2010. In 2009, KRA largely failed to meet its targets.

The taxman is expected to collect Sh128.6 billion in the third quarter of 2009/2010 financial year representing the January-March 2010 window.

The revenue will make it easier for the government to meet its expenditure plans contained in the Sh860 billion budget announced by Finance Minister Uhuru Kenyatta in June 2009.

The authority is hoping to build on the good second quarter performance to help the government meet its revenue estimates which have continued to grow owing to increasing expenditure.

According to the Budget Strategy Paper covering 2009-2012, the government estimates a further growth in revenue to Sh711.1 billion in the next three years to cover its increasing expenditure.

“The authority is optimistic of surpassing the third quarter target and ultimately exceeding the target for the financial year,” said Mr Michael Waweru, the Commissioner General of KRA.

KRA targets to collect a total Sh545.2 billion for the 2009/2010 financial year up from Sh480.6 billion in the 2008/2009 fiscal year.

KRA’s first quarter for the 2009/2010 was not so rosy as it fell short of its Sh128 billion revenue target for the July-September 2009 by Sh4 billion.
Meeting targets was also elusive for the taxman in the 2008/2009 fiscal year due to several challenges including the global economic contraction, the dismal performance at the Nairobi Stock Exchange and the effects of the 2008 post election violence which slowed down economic activities across the country.

In the meantime, KRA has cited the rising inflation, depreciation of the Kenyan currency against major international units as some of the factors that could hinder it from realising its revenue targets.

The institution has dismissed 162 workers in the last 18 months in its ongoing efforts to stem corruption and step up revenue collection.

The Authority says in its Corporate plan for 2009-2012 that its efforts to meet revenue targets is hindered by a weak staff base as a result of most workers leaving for greener pastures because of uncompetitive remuneration and low staff morale.

The authority is recommending an increase of staff salaries which will ultimately increase staff costs from Sh8.1 billion in 2009/10 fiscal year to Sh9.5 billion in the 2011/12 financial year.

The increase according to the authority will enable it attract high calibre employees who will enable it meet its revenue targets.

If KRA’s recommendation to increase the salaries for its more than 4000 workers is implemented, Treasury will have to increase allocations to the taxman and this will inflate the annual budget.

The Authority also says it would need more than Sh2 billion to reform most of its departments so as to bring them up to standards through automation so as to enhance revenue collections.

KRA has blamed limited automation of its border posts and field offices to revenue leaks and has been computerizing its offices at the Post of Mombasa so as to stem corruption.