KENYA Revenue Authority could have missed its 2012 revenue targets by Sh99 billion after Parliament failed to pass the VAT Bill. This coupled with the challenges in implementing the 10 per cent exercise tax on transaction fees for financial services such as M-Pesa and bank charges hurt KRA's initial target forcing it to review the amount downwards. KRA said yesterday it was supposed to have collected a total of Sh881.2 billion for the financial year 2012/2013.
But the two bottlenecks, coupled with a slower than expected economic growth, lower inflation and a stronger exchange rate saw this target being revised downwards to Sh746.6 billion. As a result of these macro economic indicators, the taxman missed to collect some Sh45.1 billion and another Sh11 billion from the non-passage of the contested VAT Bill.
"The rate of inflation influences consumption tax," said KRA commissioner general John Njiraini during the release of the revenue figures. In total, KRA collected 800.1 billion, a 13.2 per cent growth from the Sh707.4 billion collected in the previous year. This financial year, the revenue body is expected to collected Sh975 billion to partly fund the ambitious Sh1.6 trillion budget of Uhuru Kenyatta's Jubilee administration.
"For us, we will face it...we may have issues, but we go for it," Njiraini said on the Herculian target. According to Njiraini, though economic conditions have not picked up following the March 4 elections which lead to a Sh9 billion loss in revenues, various tax administrative measures have helped to seal loopholes and increase revenues for the last quarter of the financial year ended June 30. For the period between April and June this year, a total of Sh240 billion has been collected, a 15 per cent growth from the Sh208.7 billion raised over a similar period the previous year.
This period is crucial for the tax agency because it presents a picture of how the coming year will be. However, there are still concerns in the customs and large tax payers categories which have not registered as much growth as was expected. For the three months, custom services raised Sh55.7 billion, a 2.7 per cent growth while large tax payers category raised Sh123.5 billion, a 20.7 per cent improvement. In May however, collections from customs declined by 5.8 per cent while those from large tax payers slowed to 9.9 per cent in June from 20.2 per cent in May.
In addition, petroleum revenue was adversely affected by decline in volumes from 5.3 billion litres in 2011/12 to 5.1 billion in 2012/13. Njiraini used the forum to put forward a strong support for the VAT Bill arguing that the country is foregoing so much in terms of development at the expense of pleasing the masses. "If Rwanda can do it, why can't Kenya do it," Njiraini asked.