KRA’s annual tax collections Ksh.354 billion off original target

Kenya Revenue Authority (KRA) tax collections for the year ended June 30 were Ksh.354.1 billion off their original target as the tax man again missed the mark in expected revenue mobilisation.

According to an analysis of the National Treasury statements on actual revenues and net exchequer issues, actual tax receipts stood at Ksh.1.453 trillion against an original estimate of Ksh.1.807 trillion.

The annual collections were however only Ksh.12.7 billion shy of revised estimates of Ksh.1.466 trillion- the latest revision in a series of adjustments carried out through the just ended fiscal year.

The dip in collections is partly attributable to the prevailing Covid-19 pandemic which hit hard at the tax man’s basket in the fourth quarter of the 2019/20 financial year.

Collection made in March through June were for instance down by Ksh.81.5 billion in comparison with a similar period last year.

Part of the trim on revenues has been attributed to lower income taxes from employee layoffs and company closures driven in large part by the pandemic.

Adjustments made through April’s Tax Laws (Ammendment) Act ate into the tax man’s basket as the effective VAT rate was brought down to 14 percent from 16 percent while both the rates of pay as you earn PAYE and corporation tax.

Both the National Treasury and KRA had warned of the decline in collections over recent months leading up to June 30.

Other key receipts made in the year included Ksh.121.7 billion against a revised target of Ksh.149.2 billion.

Total external loans and grants meanwhile totalled Ksh.299.7 billion against a Ksh.301.3 billion.

Gross domestic borrowing receipts were meanwhile at Ksh.558.9 billion against a raised threshold of Ksh.664.4 billion leaving total revenue and financing at an estimated Ksh.100 billion shy of the mark at Ksh.2.6 trillion.

Fiscal outturn

The shortfall registered in the mobilisation of the budget funds denoted as revenues plus net financing hit out at disbursements to various budget segments.

Disbursements to the National government for instance totalled Ksh.1.03 trillion against a target of Ksh.1.1 trillion.

Scheduled Consolidated Fund Services (CFS) payments were meanwhile Ksh.72.3 billion shy of the mark at Ksh.798.2 billion against an expected Ksh.870.5 billion.

Total disbursements to counties including conditional grants and loans meanwhile stood at Ksh.316 billion against a Ksh.347.9 billion revised target.

Pressed by dipping tax revenues the National Treasury raised the ante on local borrowing as net domestic loans taken hit Ksh.441.9 billion excluding Ksh.222.6 billion in local debt rollovers.

The new 2020/21 fiscal year will open with a balance of Ksh.21.4 billion as receipts from the recently disbursed Ksh.80.4 ($749 million) IMF loan.

This will be Ksh.76 billion less than the last Ksh.97.4 billion opening balance arising from proceeds of the 2019 issued Eurobond.