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WAIKENDA: KRA must reform to serve Kenyans effectively

It must decisively deal with corruption and cartels that have infiltrated the service.

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by The Star

Coast31 October 2022 - 12:58
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In Summary


  • The first point of ensuring that taxation is not weaponised is very important.
  • It should think of how to reduce taxes, broaden the tax net to get more Kenyans and work alongside companies to strengthen them, and not cripple operations.

A nettle stung a boy and so he ran home and told his mother, saying, “Although it hurts me very much, I only touched it gently.” “That was just why it stung you,” said his mother.

“The next time you touch a nettle, grasp it boldly, and it will be soft as silk to your hand, and not in the least hurt you.” This was a lesson to the boy that whatever you do, do it with all your might.

Last week during National Taxpayers Week, President William Ruto urged the Kenya Revenue Authority to stop harassing taxpayers while collecting taxes. In addition, he challenged KRA to work to increase efficiencies that would see the country expand its tax base.

Kenya’s tax net is still too low and one of the core challenges for KRA is the persistent focus on the same set of taxpayers, mainly through PAYE and corporates. This is the same set of taxpayers that KRA targets for audits because any incident of non-compliance established is likely to produce significant tax revenue reduction.

Expanding the tax base will mean bringing more people and income into the tax net and helping collect more than Sh3 trillion which could go a long way towards funding important projects in food security sector, health and manufacturing.

But the first point of ensuring that taxation is not weaponised is very important. Let’s face it, the last regime had weaponised this institution as a political machine, to the detriment of law-abiding businesspeople.

I never understood why the KRA chose to run down vibrant companies like Keroche Breweries and go after Humphrey Kariuki. In the process, they ended up destroying jobs, reducing the tax base and in effect hurting the economy.

Granted, all companies must pay their taxes, but running down these businesses has denied the government billions in taxes plus thousands of jobs to Kenyans. There must be fairness in the running of government institutions such as KRA.

The era of selective justice, where some few selected individuals get preferential treatment while others are dealt with ruthlessly must come to an end. This will help the country expand its tax base as people will see fairness in the processes.

According to KRA, less than 7 million Kenyans are registered as taxpayers yet there are for instance 30 million M-Pesa accounts. In the last election, there were 20 million Kenyans registered as voters, meaning that the number of taxpayers should be as high.

If that high number of Kenyans can register for M-Pesa or as voters, it means that every adult should have a KRA PIN to ensure that we all contribute to the country’s revenue growth in the coming years. KRA must therefore work to ensure that this is possible by embracing more technological advancements.

The question then begs why Kenyans are not willing to pay their taxes. Probably, KRA should think of how to reduce taxes, broaden the tax net to get more Kenyans and work alongside companies to strengthen them, and not cripple operations.

KRA recorded a monumental revenue collection of Sh2.031 trillion for the financial year 2021-22, which was way above target. This stellar performance has been attributed to friendlier policies that enabled Kenyans to voluntarily pay taxes and use of technology to enhance efficiencies.

However, this is still very low given that Kenya’s GDP is Sh12 trillion, meaning that the collections are less than 15 per cent. Given that the KRA has in the past managed to do 18 per cent, the revenue from taxes should be hovering around Sh2.5 trillion, which would inject almost Sh500 million extra into the economy.

Lastly, KRA must also decisively deal with corruption and cartels that have infiltrated the service. Kenya is the largest economy in the region and yet Tanzania and Uganda are selling three times the stamp duties that we are selling.

This means that there are people who are selling stamp duties and keeping this money for themselves. KRA must deal with these internal inadequacies to ensure that all taxes are collected in order to stop overtaxing the general public.

 

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