Editorials

EDITORIAL: KRA use of auctioneers should be fair, credible

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The Kenya Revenue Authority offices in Nairobi. FILE PHOTO | NMG

The decision by the Kenya Revenue Authority (KRA) to hire a team of auctioneers to help it track properties of individuals and companies who have defaulted on tax obligations is a sensitive one and should be implemented guardedly to avoid hurting the country’s business profile.

The taxman says the auctioneers would help recover tax arrears amounting to Sh192 billion as at June 2017 mainly from individuals and companies that have lost disputes against the KRA in court or at the tax tribunal.

This will mark a shift from the traditional system of revenue recovery to prosecution, helped by intelligence gathering on tax cheats.

While we appreciate the revenue collection challenges facing the KRA, the deployment of auctioneers should be done in a professional and humane manner, including the granting of the targeted parties another chance to offset their dues.

While auctions may be an effective way to recover debt, they often paint a bad image of a hostile business climate and the KRA must be cautious to avoid that.

The economy is already in bad shape and we cannot afford to be viewed as a country harassing and tormenting businesses and individual taxpayers.

The National Treasury has indicated that nearly half or Sh90 billion of the Sh192 billion tax are penalties and interest accumulated over the years. Out of the total tax arrears, Sh158 billion remains uncollected in pay-as-you-earn. It further says that Sh4 billion of the tax arrears date back to 1992 and prior years.

Clearly, the Treasury and the KRA are well placed to resolve part of these feuds through amicable solutions such as waiver of penalties or write-offs of some of the old debts. It would then negotiate softer payments of the principal sums owed.

Focus should remain on improving tax collection more efficient to beat the now common shortfall in revenue targets. The revenue net should be cast as wide as possible to guarantee fairness and not hound a few perceived to an easy target. Those with tax obligations should, however, exercise their civic duty and honour tax obligations without setting up unnecessary duels with KRA.