•The taxman has accumulated pending bills amounting to Sh9.45 billion, comprising Sh4.98 billion in pending bills and Sh4.47 billion in Excisable Goods Management System debt.
•KRA’s indicative recurrent funding for FY 2024-25 stands at Sh22.33 billion, supplemented by an Appropriation-in-Aid (AIA) of Sh3.64 billion, totaling Sh25.97 billion.
Image: EZEKIEL AMING'A
Kenya Revenue Authority now wants its budget allocations be fixed at a minimum of two per cent of total revenue targets.
The tax collector argues that the current allocation is barely enough to meet staff costs in the wake of mounting pending bills.
KRA says that the proposal to anchor the budget on the revenue targets has been swept below the carpet despite providing justification.
Commissioner General Humphrey Wattanga in submissions to MPs said KRA’s funding needs to be appropriately entrenched in law in order to address the perennial challenge.
For instance, the DG pointed out that the initial budget allocation to KRA for the current financial year of Sh24.8 billion was inadequate to support staff costs and operations for the full Financial Year with a projected deficit of Sh12.4 billion.
Of these Sh10.5 billion is directed towards recurrent expenditure and Sh1.9 billion for development.
“The authority has severally submitted proposals on KRA funding for consideration in the Finance Bill to fix the funding in the KRA Act at a minimum rate of two per cent of revenue targets. The proposal has however not been approved despite justification presented,” Wattanga told the Finance committee.
KRA blamed the National Treasury for the low allocation that has hampered its efforts to clear its pending bills.
The taxman has accumulated pending bills amounting to Sh9.45 billion, comprising Sh4.98 billion in pending bills and Sh4.47 billion in Excisable Goods Management System debt.
The pending bills include Sh1.2 billion owed to staff medical service providers, Sh792 million for ICT system licenses and maintenance, Sh522 million for office rental leases, Sh796 million for scanner leasing and maintenance contracts, Sh173.9 million for insurance expenses.
KRA owes a further Sh867.7 million for electronic seals maintenance (RECTS), Sh183.2 million for motor vehicle running, leasing, and repairs, and Sh424.1 million for utilities and general supplies.
The pending bills are attributable to the delayed disbursements and inadequate funding.
Wattanga told the Kimani Kuria led committee that the situation has been further aggravated by the reduction in the additional funding allocation by Sh3.5 billion from the earlier amount communicated.
“Against the KRA ideal requirements submitted earlier for funding of Sh57.3 billion, the deficit in funding was Sh32.5 billion. The ideal requirements included the additional staff requirement items and programs to facilitate revenue enhancements,” said the Commissioner General.
KRA is now calling for its budget allocation to be increased to Sh35 billion in the new fiscal period, as the proposed allocation is insufficient to cover its staff costs and operational needs.
The authority's records show that, a non-disbursement of Sh7.1 billion of the allocated budget funds for the 2022-23 financial year (including Sh2 billion for EGMS Debt) was not disbursed leading to an increase in Pending Bills.
“In that 2022-23 financial year there was a budget funding allocation of Sh2 billion for the partial settlement of EGMS Debt which was not disbursed. The Authority has prioritised part of the amount in the current financial years additional funding,” said Wattanga.
The authority said that the amount allocated for the upcoming fiscal year 2024/25 would need to be reviewed.
KRA’s indicative recurrent funding for FY 2024-25 stands at Sh22.33 billion, supplemented by an Appropriation-in-Aid (AIA) of Sh3.64 billion, totalling Sh25.97 billion.
However, with current staff costs at Sh24.511 billion, only Sh1.45 billion remains for other operational needs, far short of the Sh15.09 billion required, excluding capital and development expenses.