Accountants have accused Treasury of presenting over-ambitious and unrealistic budgets that end up pilling pressure on Kenyans as the tax collection agency struggles to meet targets.
This is proven by Kenya Revenue Authority’s failure to meet set targets over the last three financial years. In their submission to Parliament on the Budget Policy Statement 2019, the Institute of Certified Public Accountants of Kenya said the unfeasible budgets are causing lack of balance in the economy.
“The common tendency has therefore been to make overly optimistic revenue projects leading to an increased uncertainty of resource flows,” ICPAK said.
In 2015-16, KRA collected Sh1.210 trillion against the target of Sh1.217 trillion. The following year, the taxman collected Sh1.40 trillion, missing the mark by Sh54.8 billion.
Last year, it missed revenue targets by Sh172.4 billion, due to shortfalls in income tax and appropriation in aid (A-I-A) collection. The trend is likely to continue this financial year with KRA missing nearly Sh300 billion if the current collection trend persists. KRA managed to collect Sh555.65 billion in five months to November, averaging Sh111.1 billion per month.
This means Sh1.33 trillion will likely be collected the whole year if the trend persists, against a target of Sh1.65 trillion. The target for this fiscal year contained in the Treasury’s Statement of Actual Revenues and Net Exchequer has so far been reduced by 5.03 per cent to Sh1.605 trillion from Sh1.69 trillion last month.
According to ICPAK, revenue projections by Treasury, including the 2019/2020 are not backed by economic fundamentals.
“This calls for a holistic approach and a review of economic data and macroeconomic trends when setting revenue targets,” ICPAK chair Julius Mwatu said.
The accountants further attributed low absorption of development funds as cited by the Controller of Budgets to a weak budgeting process.
For instance, during the 2015/16 annual report, total funds released by the Treasury towards development expenditure totaled Sh110.4 billion.