Tax revenue rises 13.3pc in four months to October
Data from CBK shows the Government has borrowed Sh72 billion, against a total annual target of Sh105 billion. Photo/FILE
What you need to know:
Data released Wednesday by the Treasury showed that the Kenya Revenue Authority (KRA) collected 26.5 per cent of the targeted annual revenue of Sh817.4 billion between July and October.
The gap between Government income and expenditure implies that the Treasury has had to borrow up to Sh74 billion to plug the gap.
The higher absorption rate is attributed to a revamp of government projects by line ministries.
The taxman’s collection for the first four months of the financial year has risen by 13.3 per cent to Sh216.5 billion, boosted by an improved performance in the month of October.
Data released Wednesday by the Treasury showed that the Kenya Revenue Authority (KRA) collected 26.5 per cent of the targeted annual revenue of Sh817.4 billion between July and October.
By the same period last year the Government had collected 28 per cent of the year’s target of Sh681.8 billion, putting the taxman under pressure to meet this year’s mark.
“This (increase in tax revenue) shows there is still economic growth but not as fast as had been projected,” said Johnson Nderi a research analyst at Suntra Investments.
The amount of cash released to ministries for spending until October stood at Sh302 billion, compared to total revenues of Sh228 billion which include non-tax income, grants and loans.
The gap between Government income and expenditure implies that the Treasury has had to borrow up to Sh74 billion to plug the gap.
“We estimate the Government has already borrowed more than half of its annual target,” said Alex Muiruri, an analyst with African Alliance Investment Bank.
Data from the Central Bank indicates that the Government has borrowed Sh72 billion, against a total annual target of Sh105 billion. It has also been active in external borrowing, the latest being a Sh7.2 billion loan from the Standard Chartered Bank.
A breakdown of expenditure shows that of the amount, Sh302 billion was released to the ministries, Sh232 billion was for recurrent expenditure while Sh70 billion was used for development.
The development funds reflected a 25.2 per cent usage of the Sh274 billion budgeted for an improvement to the 18.1 per cent absorbed in a similar period last year.
The higher absorption rate is attributed to a revamp of government projects by line ministries. The Ministry of Roads and Energy lead the path on usage of funds while those lagging behind include the ministry of agriculture and transport.
In the past most development funds have been absorbed in the latter part of the financial year, with some even returning the funds to the exchequer having failed to spend all the money allotted to them.
In September, after agreeing to increase the salaries of nurses, teachers and lecturers, the Government said that it was going to invest Sh1.5 billion more in the taxman in order to harness their efficiency in revenue collection.
The minister also introduced new tax measures, key being a 10 per cent excise duty on commission charged for mobile money transfer services, but which are yet to take effect after the President rejected the Finance Bill in which they were included.
The Bill was rejected on the basis of legislators using it to award themselves Sh2.2 million each as a send-off package.
The MPs now plan to use the VAT Bill, one awaited by the Treasury to widen the range of taxable income and help them achieve the set targets, as a bargaining chip to have the President authorise the MPs pay-off package.
