Parliament in session last year. Finance minister Njeru Githae has asked MPs to approve Sh58.8 billion in the supplementary budget he presented last week. File
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Finance minister Njeru Githae said Kenya Revenue Authority (KRA) inspectors would soon start visiting the leisure spots to determine if bottles with wines, spirits and other excisable items bear genuine revenue stamps.
He said the inspectors would make unscheduled visits to the establishments to bring to an end the fake stamps menace that is denying the Treasury billions of shillings in revenue.
Entertainment joints, including bars, restaurants and hotels, are the latest targets in the Treasury’s crackdown on tax evasion through dubious excise duty stamps.
Finance minister Njeru Githae said Kenya Revenue Authority (KRA) inspectors would soon start visiting the leisure spots to determine if bottles with wines, spirits and other excisable items bear genuine revenue stamps.
“We suspect there are very many fake stamps being used on wines, spirits and beer bottles, leading to loss of revenue to KRA,” Mr Githae said while asking MPs to approve the Supplementary Estimates for the 2012-13 fiscal year.
He said the inspectors would make unscheduled visits to the establishments to bring to an end the fake stamps menace that is denying the Treasury billions of shillings in revenue.
With the entertainment joints being key outlets for cigarettes, another product which is prone to fake excise duty stamps, the inspectors could end up hitting two birds with one stone.
Mr Githae said KRA would also install an online system in alcoholic drinks manufacturing plants that automatically charges revenue on every bottle passing through the production line and sends a signal to Times Tower.
“This will ensure that immediately a bottle of whisky is filled, it raises revenue,” he said. “We are losing a lot of money from counterfeit stamps.”
KRA will also use readers to scan the stamps on bottles to confirm that the drinks on sale were the ones for which revenue had been paid to avoid substitution, which abets tax evasion by enabling goods that should pay higher taxes to pay less.
KRA has been allocated Sh2 billion to wage its war against counterfeit revenue stamps through which the government loses about Sh30 billion.
Mr Githae said the Treasury was also losing revenue in the public transport business and KRA would stop accepting cash for advance tax paid by Public Service Vehicles (matatus) and for inspection certificates.
“Let them pay money in the bank. If that is done we will plug and stop those leakages,” he said.
According to Mr Githae, the Treasury will borrow Sh30.7 billion, cut spending across all ministries and defer projects to meet government expenditure until the new financial year.
He said the government had been left with limited options because it could not raise taxes in the middle of a financial year.
New salary demands from health workers, teachers, lecturers and the police, who are due for review, as well as resources for elections, devolution, security and fighting terrorism in Somalia, strained budgetary resource allocations.
In the supplementary budget, Sh32 billion has been set aside to pay salaries for teachers, lecturers, doctors and the police.
“We have been left with limited options other than to finance our Budget through existing contingency, deferment of projects that are not likely to start this financial year, reallocation of budgeted expenditure across board and budget cuts,” Mr Githae told MPs.
With the borrowing of an additional Sh30 billion, the Budget would be fully financed.
In the supplementary budget, the Treasury has allocated Sh10 billion for administration and operationalisation of county offices and Sh6 billion to meet salaries and expenditure of county governors, executives, assembly members and staff.
An additional one-off expenditure of Sh3.2 billion has been allocated for county infrastructure development.
However, money for development of counties has been given to line ministries that had entered into contracts.
The Treasury gave Sh6.7 billion to the Independent Electoral Boundaries Commission to pay for biometric voter registration kits and Sh7.2 billion for security operations both internally and in Somalia.
Mr Githae set aside Sh1.4 billion for constitutional reforms and the Transitional Authority to use to employ temporary staff for counties.
The authority will employ temporary secretaries of counties who will swear-in governors who will then swear in county assembly representatives.
Health services and emergencies including victims of terrorism got Sh1.5 billion while Sh5 billion went to civil contingency expenses which will include a presidential election run-off.
