Kenya: President Ruto Gets Sh1.2Billion Boost to Deploy KRA in Markets

President Ruto Gets Sh1.2bn Boost to Deploy Kenya Revenue Authority (News Central TV)

President William Ruto is tightening the noose on “traders” who have in the past not been paying tax, therefore the National Assembly’s Budget and Appropriations Committee (BAC) has suggested an additional Sh1.2 billion to the recurrent budget of the Kenya Revenue Authority (KRA) hire tax assistants.

As the government launched new policies aimed at Kenyans in the informal and agricultural sectors, the committee proposed adjusting the general administration planning and services budget of the National Treasury to account for the funds for the hiring of the agents.

“Increase Sh1.2 billion (recurrent) for KRA to employ tax assistants,” the BAC said in a report to the full House.

The Treasury stated that the untapped Micro, Small, and Medium Enterprises (MSMEs) sector tax base has the potential to generate Sh2.8 trillion in revenue in the Budget Policy Statement (BPS) for 2023.

A recently released National Tax Policy (NTP) aims for a unified collection of taxes, levies, and fees and the sharing of information between the national and county governments, which would net more people who haven’t been paying taxes and close existing collection loopholes. The NTP is to guide Kenya’s taxation framework for at least three years.

The Treasury suggested focusing heavily on agriculture and the unorganised sector in the policy guidelines for hard-to-tax sectors in order to boost tax yields.

“To achieve this objective, the government will explore ways of enhancing the taxation of informal sectors, including by increasing their presence in big towns and cities, and explore the mechanisms for collecting taxes from the informal sector, such as the appointment of tax collection agents,” the policy states.

President Ruto Gets Sh1.2bn Boost to Deploy Kenya Revenue Authority (News Central TV)

Educational Programmes

Additionally, it suggests implementing tax education initiatives for farmers and other informal sector players, as well as “requiring farmers and informal sector players to register with respective sub-sector associations and co-operative societies.”

As the government works to increase collections, there is also a significant push to guarantee that local governments and the federal government share information that will help attract more potential taxpayers.

Tax, levies, and fee collection in Kenya could also be done at a central point soon, as opposed to currently where county and national governments run a different set of collection channels, with the policy requiring a progressive shift from the current framework.

“Progressively adopt a unified system for collection of taxes, fees, and levies for the national and county governments,” the NTP states.

In many areas where counties in Kenya now collect taxes, fees, and levies, such as parking fees and business licences like single business permits and cess, this strategy would result in changes.

Furthermore, it would modify the counties’ own source revenue (OSR), because most of the devolved units have had low performance and weak capacity in their own revenue collection, which has not returned much from their abundant resources.

Based on a report published by the Commission on Revenue Allocation last year, while having the ability to collect Sh216 billion yearly, Kenya’s 47 county governments were only bringing in Sh31 billion, an underperformance of more than 80%.

Since the KRA only collected Sh1.57 trillion in taxes by the end of April, the government is under pressure to collect at least Sh535 billion in taxes in the final two months of the 2022–23 fiscal year.

The Sh535 billion that the taxman has to collect to reach the Sh2.1 trillion objective set forth in the budget is 70 percent greater than the average collection over the 10 months leading up to April, thus this will be a difficult challenge for the taxman.


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