KRA projects Ksh.283B deficit in annual tax collections


KRA projects Ksh.283B deficit in annual tax collections
KRA offices in Nairobi's Times Tower. PHOTO | COURTESY

In Summary

KRA says the deficit in collections is attributed to:
  • closure of companies
  • reduction in production and sales
  • reduction in working hours
  • closure of borders
  • reduced imports and exports and compounded layoffs
  • unpaid leaves and pay cuts

The Kenya Revenue Authority (KRA) has disclosed a Ksh.283 billion hole in expected collections in the financial year ending on June 30.

The tax man attributes the deficit to the strain brought about by the Covid-19 pandemic which has since put a dampener on expected revenues to be paid to the exchequer.

The disclosure is contained in notes from a meeting between the Finance and National Planning Committee of the National Assembly and KRA Commissioner General Githii Mburu on April 15.

“The Commissioner General submitted that the pandemic shall have a negative impact on tax collections arising from the prevailing economic environment,” notes the Committee in its report tabled to the house on Wednesday.

The KRA had initially projected to raise revenues totalling Ksh.529.2 billion including Ksh.368.3 billion in domestic taxes, Ksh.159.5 billion in custom duties and Ksh.1.4 billion in traffic generated revenues.

The new estimates now leave a Ksh.184.8 billion gap in collections from the original figures.

KRA says the deficit in collections is mainly attributable to the closure of companies, a reduction in production and sales, a reduction in working hours, closure of borders, reduced imports and exports and compounded layoffs, unpaid leaves and pay cuts.

The tax man further attributes support measures contained in the now Parliamentary adopted 2020, Tax Laws (Ammendment) Act will take away more from the collections basket even as it maintained its goal of enhancing collections.

“He submitted that KRA will continue to make every effort to enhance revenue collection even under the prevailing difficult conditions and should the situation improve, the revenue projections will be revised accordingly,” added the report

KRA collections, denoted as ordinary revenue stood at Ksh.1.216 trillion in the first nine months to March 31 to represent a Ksh.132.3 billion deficit from the target of Ksh.1.348 trillion in the period.

The revised targets to collect a further Ksh.344 billion in the next three months if successful will push total collections for the year to Ksh.1.56 trillion in ordinary revenues or an equivalent 84.7 percent of the originally approved figures.

The cumulative collections if hit would regardless present growth in collections year over year by four percent from a net total of Ksh.1.497 trillion in collections registered across the 2018/19 Financial year as per Treasury’s Quarterly Economic and Budgetary Review data from June 2019.

On its part, the National Treasury has collaborated the anxiousness in collection in its proposed downward revisions of total government spending last week.

“The implementation of the 2019/20 budget continues to face various challenges. These include the Covid-19 pandemic which has slowed down the economic performance, underperformance of projected revenues and the increased demand for additional priority expenditures,” Treasury CS Ukur Yatani told MPs last week in an attached note that carried the year’s second supplementary estimates.

On Wednesday, the National Assembly agreed with the Cabinet Secretary by approving the Budget and Appropriations Committee (BAC) report on the budget supplements ahead of the voting on the appropriations bill next week.

The BAC reports back the revisions to spending by the national government to the tune of Ksh.51.7 billion comprising of Ksh.83 billion reductions to development expenditures and Ksh.31.31 billion in increments to recurrent spending.

According to the most recent available data from statements on actual revenues and net exchequer issues, total revenues are still pegged at Ksh.1.843 trillion and Ksh.240.3 billion on ordinary revenues and ministerial appropriations-in-aid (A-i-A).

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Story By Kepha Muiruri
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