Tax collection in nine months through March 31 fell short of the Sh950.25billion revised target by 8.58 per cent on pro rata basis, fresh official data shows.
National Treasury CS Henry Rotich says in the Statement of Actual Revenues and Net Exchequer Issues, published in the Kenya Gazette on Friday, total tax revenue stood at Sh868.75 billion against Sh1.267 trillion full-year target. This is, however, Sh92.87 billion, or 11.97 per cent, more than Sh775.88 billion the Kenya Revenue Authority collected in the same period of last financial year. The collection accounted for 64.83 per cent of government’s total revenue of Sh1.34 trillion in the nine-month period. The total revenue is a growth of 8.06 per cent over the Sh1.24 trillion in first nine months of 2015-16 financial year.
The taxman has been undertaking reforms aimed at increasing tax compliance, conservatively estimated at just over 50 per cent, and seal loopholes used by companies and individuals to avoid or evade paying tax.
The reforms include linkage of KRA’s online tax filing platform, iTax, with third-party databases. The first phase of the project started last December, and is targeted at companies doing business with the government through the Integrated Financial Management Information System.
“We will maintain strong revenue effort by bolstering our tax administration procedures to minimise revenue leakages and leverage on information technology,” Rotich said in the budget statement for financial year 2017-18 to the National Assembly on March 30.
The Treasury has been keen on growing ordinary revenue in a bid to cut fiscal deficit, which is covered through borrowing which has become more expensive since Kenya became a lower middle-income country in September 2014. Rotich has forecast the deficit to reduce to six per cent of the gross domestic product next financial year from a projected 8.3 per cent this fiscal year ending in June.
Fitch Ratings said on Friday the deficit for this financial year is higher than the firm’s 7.1 per cent forecast.
“The impact on Kenya’s sovereign credit profile will depend on the authorities’ ability to deliver ambitious revenue increases and keep control of spending in an election year,” Fitch said, upholding Kenya’s B+ sovereign rating with a negative outlook.