• The PAYE Tax grew by 2.0 per cent marking a drop from an average growth of 11.0 per cent recorded between July 2019 and February 2020.
• The slow growth was driven by decline in employment rate in the fourth quarter emanating from measures taken by mainly private firms to reduce operating costs.
Image: COURTESY
Kenya Revenue Authority's collections for the year 2019-20 grew by 1.7 per cent in spite of the economic chanllenges brought about by Covid-19.
In a statement on Thursday, KRA Commissioner General Githii Mburu said the authority collected Sh1.607 trillion between July 2019 - June 2020 as compared to Sh1.580 trillion collected over the same months in the last Financial Year.
Mburu said "the performance is favourable and matches the prevailing economic indicators, especially the projected GDP growth of between 1.5 and 2.3 per cent in 2020.
He said KRA recorded a performance rate of 97.9 per cent reaching a new record.
"In addition, KRA collected other monies including Agency Fees amounting to Sh97.114 billion. This is revenue collected on behalf of other government agencies mainly at the ports of entry. They include Road Maintenance Levy, Airport Revenue, Aviation Revenue,and Petroleum Development Fund amongst other levies," Mburu said.
With a performance rate of 98.6 per cent against target, the exchequer revenue grew by 2.2 per cent with a collection of Sh1.510 trillion compared to Sh1.477 trillion collected in 2018/19 financial year.
The PAYE Tax grew by 2.0 per cent marking a drop from an average growth of 11.0 per cent recorded between July 2019 and February 2020.
According to Mburu, the slow growth was driven by decline in employment rate in the fourth quarter emanating from measures taken by mainly private firms to reduce operating costs.
The pandemic has also resulted in economic turmoil leading upto an estimated 1.1 million Kenyans losing their source of income nationally since the advent of Covid-19.
Labour and Social Protection Cabinet Secretary Simon Kiprono Chelugui said by June, at least 330,000 came out to declare redundancies and job losses to the ministry.
The PAYE tax reviews by president Uhuru Kenyatta to cushion Kenyans from the effects of Cornavirus also contributed majorly to the reduction of revenue collection.
Uhuru directed treasury to offer 100 per cent tax relief for persons earning a gross income of Sh24,000 and PAYE tax be reduced from 30 per cent to 25.
Meanwhile, KRA recorded a 6.4 per cent decline in the domestic Excise tax with an average growth of 4.3 per cent recorded between July 2019 and February 2020.
"This performance is mainly attributed to the effects of the Covid-19 pandemic, which contributed to the decline of production of excisable products like cigarettes, spirits, keg beer and non-keg beer," Mburu said.
Revenue collection by Domestic Taxes Department (DTD) experienced a growth of 4.0 per cent in 2019/20, down from an average growth of 13.9 per cent recorded in the period July 2019 to February 2020. DTD collected Sh1.092 trillion in 2019/20 financial year translating to a performance rate of 97.8 per cent against target.
Total revenue collected from the Customs and Border Control tax (C&BC) amounted to Sh510.63 billion translating to a performance rate of 98.4 per cent.
This is a 2.8 per cent reduction compared to the previous Financial Year.
Reduction of VAT rate from 16 per cent to 14 adversely effected the tax head’s performance with a decline of 6.4 per cent in FY 2019/20.
This is a dip from an average growth of 4.3 per cent recorded between July 2019 and February 2020.