The Kenya Revenue Authority headquarters at Times Tower building in Nairobi. Data released by the Treasury shows that as at end of January KRA had collected Sh401 billion against the full-year target of Sh837 million. Photo/FILE
What you need to know:
Data released by the Treasury shows that as at end of January KRA had collected Sh401 billion against the full-year target of Sh837 billion.
Taxman’s efforts to grow its revenue collection have been hampered by a less-than-robust economic growth and the failure to pass a new value added tax (VAT) structure that was factored in the Treasury’s annual target.
The Kenya Revenue Authority (KRA) is yet to reach half of the annual revenue collection target with seven months of the financial year already passed, making it more unlikely that the taxman will hit the mark set by the Treasury.
Data released by the Treasury shows that as at end of January KRA had collected Sh401 billion against the full-year target of Sh837 billion.
Taxman’s efforts to grow its revenue collection have been hampered by a less-than-robust economic growth and the failure to pass a new value added tax (VAT) structure that was factored in the Treasury’s annual target.
“The target was too high in the first place given that we are in an election year and there are inherent uncertainties that go with that and it was set with a view to trying to cover expenditure rather than us looking at expenditure and trying to bring it down,” said Nikhil Hira, a managing partner at audit firm Deloitte and Touche.
Apart from the failed enactment of the VAT Bill which was expected to widen the bracket of taxable goods, KRA also attributed the low collections to loss of import taxes through dumping of transit goods and sagging oil imports.
The taxman had hoped to collect an extra Sh50 billion under the new VAT rules.
The Treasury has also resigned to the fact that the target may not be achieved and has raised its target for borrowing in the local market and the ceiling for international debt.
In the June budget statement Finance minister Njeru Githae had stated they aimed to borrow Sh105.6 billion from the local market which has now been increased to Sh137.2 billion.
“Government’s need for funds will likely trigger issuance of more Treasuries to cover the fiscal shortfall which currently stands at 5.1 per cent of GDP,” said research firm Stratlink Africa. “This may see a reversal in interest rate trends.”
The higher borrowing is expected to pick pace this month before the country goes to the polls in March when the markets are likely to be quiet.
The Treasury data shows other sources of revenue other than tax were off the half-year mark with grants at Sh5 billion against full-year target of Sh14.6 billion while other non-tax revenue were at Sh18 billion against the annual target of Sh51.4 billion.
Respective ministries had absorbed 43.7 per cent of the development budget and 46 per cent of recurrent expenditures.
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Note: The results are not exact but very close to the actual.
