Revenue collection by ministries falls, Treasury misses the mark again

Revenue collection by ministries/appropriations in aid (A-i-A) fell by Ksh.13.9 billion in the financial year ended June 30 to Ksh.160.2 billion as the National Treasury missed its annual target again.

Though combined revenues year over year improved by Ksh.62 billion, collections fell off the original trail by Ksh.382 billion.

According to Treasury data from the fourth quarter Economic and Budgetary Review report published on Tuesday, total revenue collections in the year stood at Ksh.1.733 trillion.

Ordinary revenues which include tax collections by the Kenya Revenue Authority (KRA) and non-tax income totalled Ksh.1.573 trillion rising from Ksh.1.496 trillion last year.

The National Treasury original revenue targets stood at Ksh.2.1 trillion including Ksh.1.88 trillion in ordinary revenues and Ksh.238.7 billion in A-i-A before revising the ambition to a lower Ksh.1.86 trillion.

The lower than expected appropriations from ministries are largely attributable to a hit on operations occasioned by COVID-19 pandemic.

The majority of ministries rely on entities such as public universities and public service agencies such as Huduma Centres to raise revenues.

The operations of these entities were greatly hampered by measures to contain coronavirus.

Lower tax collections by KRA are meanwhile attributable to depressed economic activity in the country following the outbreak along with tax incentives by government including cuts to income tax and a reduction in VAT.

The tax man’s collections from tax income alone were Ksh.354 billion off the original mark with part of the plunge coming between the months of March and June where collections reduced by Ksh.81.5 billion year over year.

COVID-19 is expected to continue hitting revenue mobilisation efforts by the National Treasury over the short-term as economic activity continues to take a beating from the pandemic.

Treasury  however retains an ambitious target to mobilize Ksh.1.87 trillion in the year to June 2021 including Ksh.1.62 trillion as ordinary revenue and Ksh.249.1 billion in ministerial aid.

The exchequer is expected to publish its tax income outturn for the month of July on Friday