KRA sees difficulty in Sh1.4 trillion election year target

Slowed economic activity due to increased campaigns for next year’s General Election could hit the taxman’s collection target, the Kenya Revenue Authority (KRA) warned on Wednesday.

The economy ordinarily takes a dip every five years as political campaigns take centre stage and businesses hold back investments to await the outcome of the elections.

KRA commissioner-general John Njiraini however said the taxman is banking on a raft of tax reforms to achieve an ambitious target of Sh1.4 trillion for its overall tax collections in the 2016/2017 financial year.

He announced a 13.2 per cent increase in total tax collection for the 2015/2016 financial year to Sh1.210 trillion compared to the Sh1.182 trillion collected in the 2014/2015 period.

Despite the Sh141 billion growth, KRA still fell short of the Sh1.217 trillion target set by the Treasury by Sh6.5 billion.

Mr Njiraini attributed the performance to a slowdown in corporate taxes as firms took a hit from slowed economic activity.

READ: Taxman misses revenue target as tough economic environment bites

He however added that consumption taxes showed an upward trend due to heightened crackdown on tax cheats.

“It’s a mixed performance, strong in certain areas, not so good in others. The shortfall in corporation tax was the main challenge. We indicated from the beginning of the year that we were receiving signals from the business community that business was not [performing] as expected,” said Mr Njiraini.

Going forward, the KRA is relying on a raft of reforms it says will enable it achieve its ambitious targets.

They include tax base expansion as well as custom reforms to curb tax evasion by importers besides plugging revenue leakages.

KRA, Mr Njiraini said, will for starters look to enrol more Kenyans on its i-Tax platform whose numbers now stand at 3.97 million as at June this year representing a 53 per cent uptake by potential tax payers.

The agency collected Sh608 billion through the iTax system in the period under review. A recently announced plan to tax the informal sector through a presumptive tax is also being fine-tuned, said Njiraini.