Tax collection increases despite harsh business and economic environment, says KRA

By Ben Kinyanjui

Kenya Revenue Authority (KRA) collected Sh338.1 billion as revenue between July and December last year.KRA Commissioner General Michael Waweru says revenue has increased

Outgoing KRA commissioner General Michael Waweru said the amount that represented 11.6 per cent growth in revenue collection was Sh35 billion more compared to a similar period the previous year.

Despite the modesty growth, the commissioner said the difficult business and economic environment poses challenges to the authority that aim to collect Sh733.4 billion up from Sh634.9 billion collected last financial year.

“The unfavourable economic environment experienced in the economy is likely to continue into the third quarter of FY 2011/12,” he said during a press briefing Tuesday.

“A continuation of the trends witnessed in the first half will undermine revenue performance in the third quarter 2011/2012 fiscal year.”

He said the authority is expected to collect Sh164.3 billion in the third quarter, translating to a growth of 16.2 per cent over the Sh141.4 billion collected in a similar period last year.

Mr Waweru who leaves the authority on March 1 after serving for nine years however remained non-committal on whether the authority will achieve its target saying the revenue body was instead concentrating on revenue growth.

He denied claims that the authority had the potential to collect Sh800 billion as taxes saying analysis of the economic situation could not sustain such an argument.

“For Kenya with an estimated GDP of Sh3.3 trillion in 2011/12 and revenue to GDP ratio of 23.5 per cent, a Sh800 billion increase in revenue would raise revenue to GDP to over 47 per cent of GDP,” he said.

“This is unrealistic figure given that the rich OECD countries average barely 36 and 9 per cent of that is social security contributions which are not part of the Kenyan revenue base.”

However, Mr Waweru said the authority would continue to implement reforms that would close any tax leakages as well as improve efficiency in its operations.

Top on the list is e-payment system that would allow taxpayers to make their payments online and reduce perennial congestion KRA headquarters at Times Tower.

Incoming commissioner general Mt John Njiraini said the authority was developing a new corporate strategy that would capture some of the priority areas, including the proposed reduction in VAT refunds.

He said the proposed VAT amendment bill will reduce the number of items that are zero-rated saying the producers rarely passed the benefit of the waiver to the consumers as expected.