Editorials

Revenue target unrealistic

tax (4)
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Summary

  • In the draft Budget Policy Statement for 2021, the Treasury targets an extra Sh194 billion from ordinary revenue to fund a Sh2.97 trillion budget.
  • Tax on goods, services, salaries and imports — part of ordinary revenue — is projected to grow to Sh1.764 trillion from the Sh1.57 trillion that is targeted in the current financial year.

In the draft Budget Policy Statement for 2021, the Treasury targets an extra Sh194 billion from ordinary revenue to fund a Sh2.97 trillion budget.

Tax on goods, services, salaries and imports — part of ordinary revenue — is projected to grow to Sh1.764 trillion from the Sh1.57 trillion that is targeted in the current financial year.

This upward revision of expected revenue, coming against the backdrop of an econohurting from the impact of Covid-19, is unrealistic. It is worsened by the lack of bold measures to stimulate recovery, build resilience and safeguard livelihoods.

It will only add pain to the suffering taxpayers whose incomes have been eroded by pay cuts, temporary leave or layoffs. With decreased earnings, consumers’ purchasing power is diminished, meaning that even taxes from corporate sales are depressed.

The Kenya Revenue Authority has seen its tax receipts decline by double digits, prompting it to lure taxpayers with partial tax amnesty and rewards for citizen tips on tax cheats and rogue staff.

The reality is that the Covid-19 effects will not recede fast enough and without progressive alternatives to widen the tax net, we may sink further into debt.