Treasury secretary Henry Rotich has issued an ultimatum to the taxman, warning that shortfalls in tax income would not be tolerated as the State has provided the agency with resources for improved performance.
The CS said he would personally visit tax collection points to ensure optimal collection is achieved through curbs on tax evasion and leakages.
The Kenya Revenue Authority (KRA) has in recent years missed revenue collection targets set by the Treasury, condemning the country to high budget deficits and a build-up of debt stocks.
“We have given them the mandate to collect revenues and they have to deliver,” Mr Rotich said at a press briefing adding that the government had played its part by adding KRA more personnel, procuring scanners to nab excise duty cheats, along with rollout of Integrated Customs Management System (ICMS) to seal leakages.
“I’ll personally be visiting collection points to ensure whoever is not working to deliver our targets will face the wrath of Treasury,” he said.
Tax collection by KRA in the first half of this financial year (July-December) rose by a modest six per cent to Sh630.3 billion, translating to an average monthly receipts of Sh105 billion.
This is less than the monthly average of Sh120 billion the taxman needs to collect to hit the set target of Sh1.44 trillion in full-year tax income.
The taxman attributed the slowdown in the half-year revenue growth to cooling economic activity due to a prolonged election cycle and credit crunch in the private sector blamed on interest rate caps.
KRA’s bid to widen its tax net also suffered a blow this week after the High Court quashed the plan to impose Excise Duty on bottled water, juices, soda, other non-alcoholic beverages and cosmetics.
KRA was expected to collect at least Sh3.6 billion in revenue from the tax annually.
In addition to tax receipts, Treasury CS is keen to grow non-tax income generated by government agencies to shore up public coffers.
This will come amid proposed fiscal consolidation measures, including budget cuts for all ministries and State agencies, along with reduced cash allocation for county governments.
“We have proposed to Parliament budget cuts across the board. No one will be spared, not even counties,” said Mr Rotich.
The Treasury last week asked Parliament to review the Division of Revenue Act, 2017 to cut the current budget for national and county governments following revenue shortfall of Sh84 billion.
Mr Rotich says the annual allocation to county governments will be reduced by Sh18 billion while the national government’s budget will be cut by Sh60 billion.
Persistent drought and political uncertainty linked to last year’s General Election have been blamed for sluggish economic performance.
The slowdown in economic activities saw growth for 2017 forecast at 4.8 per cent, the slowest pace since 2012, but the Treasury expects a rebound of 5.8 per cent this year.