Kenya Revenue Authority (KRA) and Kenya Bureau of Standards (KBS) inspects bales of counterfeit juice impounded during a crack down at a wholesale in Bomet town.
Central to the operation of a State, lies its tax system and tax administration. Therefore, as a common denominator taxation ranks high among the certainties of the universe. In the words of Benjamin Franklin, tax is as certain as death.
Affirming this, a kindred mind, Seth Lloyd, paralleled Benjamin Franklin’s certainty of taxes and death to the second law of thermodynamics. In it, he postulates that, despite all these certainties seemingly transforming money, life and energy into nothingness, there are some fringe benefits.
Taxes pay for roads, schools, public goods among others while the second law of thermodynamics drives cars, computers and metabolism.
As for the end of life, the search continues. Be that as it may, in our earthly abode, it is a common truth that owing to our innate diversity, we are endowed differently, materially or otherwise. This multi-variation, anchors one of the principles of taxation i.e. the ability-to-pay principle.
This principle requires that the total tax burden is distributed among individuals (citizens) according to their capability, taking into account all of the relevant personal characteristics. Under the Constitution, this principle is domiciled at Article 201(b)(i) which decrees that the burden of taxation shall be borne fairly.
Therefore, ensuring tax compliance by all eligible and those already in the tax bracket is crucial in revenue mobilisation and the fair sharing of the tax burden.
Where the tax burden is not shared fairly, the non-compliant taxpayers unnecessarily burden the compliant ones who are ever called on to dig deeper to meet the fiscal deficit. It is for this reason that tax investigations and enforcement exist. It is paying homage to the foregoing constitutional imperative of fairly sharing the burden of taxation.
Each individual is called upon to pay their fair share. The distribution of this tax burden, conforms with the pattern of income distribution (proportional to income or equal sacrifice or ability to pay). This is the ‘burden’ to fund government programmes and access quality public services while securing our national and fiscal sovereignty by reducing reliance on foreign debt.
In the conception of the American Jurist and former Associate Justice of the Supreme Court of the United States, Oliver Wendell Holmes Jr, this burden, taxes, are the “price we pay for a civilised society.” Moving forward, to appreciate the nature of this price we pay to remain civilised.
Kenya’s population currently stands at 60,486,760, according to Kenya Population clock (live). In terms of gainful employment, Kenya’s Economic Survey 2023 indicates that as of 2023, about 20 million Kenyans were employed in both the formal and informal sectors. This excludes small-scale farming and pastoralist activities.
However, out of this multiple diversity, slightly over eight million have active KRA Personal Identification Numbers (PINs). The import of these statistics is that about 11 million Kenyan taxpayers or more have not been onboarded into the tax bracket.
Nevertheless, there are positive indicators on our revenue growth over the years. Revenue mobilisation for the financial year 2023/2024 grew by a notable 11.1 percent up from 6.4 percent in the previous financial year, after KRA collected Sh2.407 trillion compared to Sh2.166 trillion in the previous financial year, translating to a performance rate of 95.5 percent against the target.
The Exchequer revenue grew by 9.5 percent on collection of Sh2.223 trillion compared to Sh2.030 trillion collected in the previous financial year which is 95.8 percent performance rate.
To aid these efforts in revenue mobilisation and sealing the gaps, tax investigations and enforcement remains steadfast in its tax compliance efforts. We continue the implementation through several approaches. Most of these efforts inevitably involve taxpayer support and facilitation.
On the other hand, enforcement remains key in ensuring compliance by taxpayers who wilfully attempt to fraudulently obtain a tax benefit by avoiding or evading payment of taxes. Tax evasion is a grave economic criminal offence that undermines our fiscal and national security.
Tax investigations and enforcement is not a one-man or woman’s show. It is a collaborative endeavour. KRA’s tax enforcement efforts involve active collaboration with other government agencies, such as the Multi-Agency Team (MAT). This team draws expertise from various agencies with distinc, albeit interdependent mandate(s) in law enforcement.
KRA is mandated to actively investigate potential violations of revenue laws and related financial crimes in a manner that enhances tax compliance and fosters confidence in the tax system.
In conclusion, in line with KRA’s vision as an agile tax and customs revenue agency facilitating voluntary compliance for all, we remain steadfast in facilitating taxpayers’ compliance. Taxpayers are therefore encouraged to take advantage of available voluntary mechanisms under the law such as Alternative Dispute Resolution.
This feeds into the ease of doing business and reduces the cost of compliance. As a result, this fulfilment of a patriotic duty to voluntarily pay taxes, averts the need to resort to other adverse and costly compliance mechanisms.
Mr David Yego is the Commissioner for Investigations & Enforcement at Kenya Revenue Authority
