Tax collection in the first five months of the current financial year fell short of the target by Sh32.2 billion, puncturing President William Ruto’s revenue mobilisation plan.
The Kenya Revenue Authority (KRA) collected Sh786.5 billion between last July and November in taxes, falling short of the target of Sh818.7 billion that had been set by the Treasury for the period, a presentation by Dr Chris Kiptoo, the Treasury PS, shows.
Dr Kiptoo was speaking on the first day of the public hearings on the budget for Financial Year 2023/24 and the medium term, which was also attended by Treasury Cabinet secretary Njuguna Ndung’u.
The worst-performing tax head was the income tax, which recorded a shortfall of Sh30.4 billion, pointing to a tough environment where earnings by companies and workers were depressed.
The Treasury had targeted to collect Sh372.9 billion from income taxes, which comprises taxes on employees’ salaries and corporates’ profits, but managed to get Sh342.5 billion.
“In the first five months of FY2022/23 total revenue performance was below target by Sh19 billion, with ordinary revenue recording a shortfall of Sh32.2 billion,” said Dr Kiptoo on Wednesday.
“This shortfall needs to be recouped to avoid hampering budget execution. Efforts are underway between the National Treasury and KRA to close the gap.”
Other Income Tax, where corporate income tax paid by firms falls, recorded a shortfall of Sh17.6 billion with the taxman getting Sh153.6 billion in the review period instead of a target of Sh171.2 billion.
The other income tax, pay-as-you-earn, which is paid by employees, had a shortfall of Sh12.8 billion with KRA getting Sh188.9 billion from workers from a target of Sh201.7 billion.
The underperformance is set to put the taxman under more pressure coming from a previous regime where it reported surplus collection and boasted of exceeding tax targets by over Sh140 billion in a year.