KRA falls short of revenue target to collect Ksh.1.56 trillion

Tax collections in October up 21.1% to Ksh.131.6 billion

The Kenya Revenue Authority (KRA) missed its annual tax target by Ksh.16.8 billion to collect Ksh.1.56 trillion in the year ending June 2021.

Data by the National Treasury indicates the taxman raised Ksh.1.562 trillion in 12 months from July last year.

This is against a target of Ksh.1.579 trillion as per revised budget estimates covering the period to June 2020.

The collection represents a much improved 98.9 percent performance.

The improved collections come on the back of a ravaging coronavirus pandemic that has battered the country’s economy since its advent in March 2020.

Several tax leads in KRA’s closet defied pandemic to register growth including import duty (6%), Pay As You Earn-PAYE (2.3%) and Value Added Tax-VAT (7.7%).

Corporation tax fell by 5.3 percent, Excise taxes went down 1.7 percent, while non-tax revenues slumped by 25.8 percent to Ksh.132.5 billion.

Tax collection was worst hit between the months of November and January with the deficit sitting at 16.7 percent in November.

The recovery registered in subsequent months was on the back of tax relief measures that were dropped in January 2021.

Total revenue including appropriations from ministries stood at Ksh.1.738 trillion, falling shy of expectations by Ksh.99.5 billion.

Ministerial appropriations stood at Ksh.176.4 billion missing the prescribed target by Ksh.82.7 billion.

Total expenditure and net lending meanwhile rounded off at Ksh.2.755 trillion against a target of Ksh.2.887 trillion living behind a fiscal deficit of 7.8 percent of Gross Domestic Product (GDP), the same as the previous year.

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At the same time, collections from July to December 2020 were dented by government tax incentives which included reductions in PAYE, VAT and corporation tax.

KRA is tasked with collecting Ksh.1.776 trillion in the current financial year with total revenues projected at Ksh.2.034 trillion.

Economic Recovery Uncertain

However, Kenya’s road to economic recovery still hangs in the balance due to uncertainty around the COVID-19 virus, delays in vaccination programmes, increasing debt levels and rising inflationary pressures.

With the slow pace in the inoculation process, emergence of variants, increasing debt levels and rising inflationary pressures, Treasury Cabinet Secretary Ukur Yatan expressed concerns that Kenya still has a long way to go.

But due to global measures put in place, Kenya is still hopeful of rising from the economic ashes it has experienced in the last one year, but will take time.

Prospects for Kenya’s economic recovery will center on the progress of the vaccination effort, macroeconomic stability and implementation of the projects under the “big four plan.”

“We remain hopeful that our economy will rebound to above 6.0 percent over the medium-term from a growth of 0.6 percent in 2020,” said CS Yatani.

He said the government would prioritize healthcare, private sector, ICT, manufacturing, tourism and transport among the projects to ensure the country’s swift economic recovery.

“In the next three financial years, we shall therefore be pursuing an investment-led economic recovery strategy (ERS) that will focus on restoring the economy to a strong growth path, creating jobs and economic opportunities across all regions of the country with a view to tackling social and income inequalities.”

Yattani spoke during the launch of the financial year 2022/23 and medium-term budget preparation process

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Lawrence Baraza is a prolific writer with competencies in Digital Media, Print, and Broadcast. Baraza is also a Communication Practitioner currently spearheading Digital content on Metropol TV's Digital Desk.

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