Kenya Revenue Authority is likely to miss its collection target for the year ending June 30. This is attributable to eight months’ data spanning from July 2022 to February 2023.
The Statement of Actual Revenues and Net Exchequer Issues by the National Treasury for the period to February 28 shows the revenue agency has so far collected Kshs1.3 trillion against a target of Kshs2.1 trillion, representing 57.1%. This leaves the taxman with a deficit of Kshs0.8trillion, represented by 42.9% to be collected within the remaining four months.
Read: KSH.2B Revenue In 7 Months-The Expressway
To achieve the target, the taxman was supposed to collect a monthly average of Kshs175.0 billion. In February, KRA collected Kshs131.4 billion, falling short by Kshs43.6 billion.
Improved efficiency in collections by KRA is supposed to result to the rise in tax collection. In addition to the tax settings, KRA collected Kshs44.5 billion in non-tax revenues which represents revenue from fines and other levies on taxpayers.
KRA has been betting on digitization and improved compliance from taxpayers to raise revenues from taxes. The taxman expects to enlist a further one million persons this year to lift the number of taxpayers registered on the I-Tax system to 7.1 million as of June 2023.
Read: KRA, Treasury Under Pressure Over Ksh.19 Billion Revenue Shortfall
The authority is set to be under pressure to improve its collections as the new government administration prioritizes domestic revenue mobilization to plug the budget deficit.
The projected under-collection is coming at the time President William Ruto’s government is focusing on domestic revenue collection to cut on borrowing. Late last year, the president challenged KRA to collect Kshs4.0 trillion annually, threatening to send top management packing if they fail to seal leaks in collections.
The head of state regretted that Kenya’s revenue collection accounts for 14 percent of the country’s Gross Domestic Product (GDP) while in other middle-income countries, the figure is as high as 25 percent.
