Kenya Revenue Authority (KRA) employees face sacking and possible prosecution in a fresh corruption fight at the Times Tower aimed at rooting out rogue officials for defrauding the exchequer hundreds of billions every year.
President William Ruto issued an ultimatum to the KRA commissioner-general Githii Mburu to urgently act on intelligence reports the Head of State shared. Dr Ruto says rampant collusion between KRA and rogue traders has resulted in massive revenue leakages, which could be in the region of Sh400 billion.
Other KRA officials are also facing charges of harassing and extorting traders, pointing to a racket that could be subverting tax administration at the agency, which last financial year outperformed the revenue target set by the Treasury.
“I have given enough information to CG (Mr Mburu) to sort out that mess and I have told him if he doesn’t sort out the mess, I’ll sort it out myself,” Dr Ruto said Friday. “We are determined to effect decisive change in order to reverse this unsatisfactory state of affairs. The practice of citizen harassment as means of tax administration is unacceptable.”
The new purge at KRA follows a similar one ordered in 2015 by the previous administration that largely centred on lifestyle audits of the taxmen.
The president has particularly singled out corruption in the collection of excise duty, which applies to goods such as spirits, bottled water and cigarettes.
He said it was unacceptable that Kenya was selling a measly 2.9 billion excisable stamps annually compared with Tanzania’s seven billion and Uganda’s nine billion despite the two economies being smaller than Kenya’s. Excisable stamps, Dr Ruto said, were less than a third of Kenya’s potential of 10 to 12 billion stamps.
“There are people who are selling the balance which is approximately seven billion stamps. I have told the Commissioner-General he must tell these people to stop and we have no choice because I do not want to fight with people, but they must stop,” he said.
KRA has outperformed targets in the last two financial years, but the new administration says the tax receipts are still “far short” of potential.
In the financial year ended June 2022, for example, the KRA netted Sh2.031 trillion against an original target of Sh1.882 trillion. “A huge obstacle to the realisation of our national revenue target is that in practice tax administration has traditionally been a repressive, menacing affair which resembles extortion,” Dr Ruto said.
“This extinguishes taxpayer incentive and diminishes the prospect of an expanded tax base pulling Kenyan backwards from its national revenue potential and denying its citizens critical services and development programmes.”
The KRA has in the past come under fire from business leaders who have complained of a tax regime that is largely unpredictable and one that overburdens a few persons and firms in the formal sector with increased taxes.
