The country’s treasury announced that it had implemented a raft of stringent measures aimed at boosting revenue collection in East Africa’s biggest economy.
“Solid interventions have been formulated to guarantee KRA’s [Kenya Revenue Authority] enhanced performance,” said National Treasury Cabinet Secretary Henry Rotich.
The country’s tax collector is using new withholding tax provisions and data mining from the new Integrated Financial Management Information System (IFMIS) deployed across the public sector in November.
Import duties are anticipated to increase in the next financial year so as to achieve a 1.85 trillion Kenya shilling budget as Kenya is looking to boost its spending by 10 per cent.
According to Daniel Kuyoh, research analyst at Kingdom Securities the country’s decision to increase its spending is because of capital investment.
“For them to increase the budget estimate means the government’s spending has gone up and this probably due to infrastructure like standard gauge railway, roads, Konza city, basically infrastructure development,” Kuyoh said.
“But I do not think KRA will achieve to raise this amount despite trying to widen the bracket by introducing capital gain tax and other levies, they [Kenyan government] will go to borrow more in the international market.”
Meanwhile, the government announced that it had fallen short on its missed tax revenue collection in the first quarter of its fiscal year by 17 billion Kenya shillings collecting 241.2 billion Kenya shillings.
KRA faces a daunting task of raising about 1 trillion Kenya shillings to finance the government budgetary plan of 1.8 trillion Kenyan shillings. In June, the country’s treasury read out the budgetary address that is 1.8 trillion Kenyan shillings, a 13 per cent increase compared with the previous fiscal year in order to unlock the country’s growth and economic development in June. The remaining amount will be funded through grants, loans and domestic borrowing.
Already the country is in talks with the International Monetary Fund (IMF) for an emergency loan of 700 to 750 million US dollars to aid in responding to looming shocks.
Kenya’s public debt, hit 52 per cent of national output in 2013, up from 44.5 per cent the previous year. Still public debt remains one of the major economic policy issues confronting the Kenyan government.
In the period ending June 2014 KRA marginally exceeded its tax collection target by 100 million Kenyan shillings. The taxman collected 963.8 billion Kenyan shillings and expects to collect a further 1.12 billion.