Economic expansion lifts tax revenue growth to 30pc

Mr Mutava Musyimi (left) and Treasury secretary Henry Rotich during the launch of the 2014 to 2017 Medium Term Expenditure Framework budgeting process at KICC in Nairobi September 16, 2013. SALATON NJAU 

By GEOFFREY IRUNGU

 

Tax revenue collection grew by 30 per cent between July and August, a senior Treasury official has said.

Justus Nyamunga, director of the economic affairs department at the Treasury, said Monday that economic growth had boosted the taxman’s collection but predicted that Kenya Revenue Authority (KRA) could still fall short of the total annual target.

“We are on course to achieve good economic growth. We have some concerns such as in tourism... We underperformed in tax collections last year, but we should improve this year with higher economic growth,” said Mr Nyamunga on Monday during the launch of the 2014 to 2017 Medium Term Expenditure Framework (MTEF) budgeting process in Nairobi.

The growth implies that KRA’s collection as at the end of August stood at Sh123.3 billion, compared to the same month last year when cumulative tax revenue stood at Sh94.872 billion.

Consultative

In July, tax collection grew by 26 per cent relative to the same month last year, Mr Nyamunga said.

The Treasury’s Statement of Actual Revenue showed tax income stood at Sh54.567 billion by the end of July compared to Sh41.97 billion in the same month last year.

Mr Nyamunga said the country was on course to achieving a 5.6 per cent growth in the gross domestic product as the Treasury had earlier predicted. This would be an improvement of one percentage point from the 4.6 per cent growth of the gross domestic product achieved last year.

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He further said domestic borrowing, targeted at a net of Sh106.7 billion, was running behind schedule.

“We have started out slow in terms of domestic borrowing but this should increase to enable us to fully finance the Budget approved by Parliament,” said Mr Nyamunga.

Launch of the MTEF consultative process marks the formal start of preparations for next year’s national budget.

By next month, different consultative groups composed of the private sector, government officials and civil society lobbyists are expected to have prepared budget proposals to pave way for public discussions on State spending priorities in November.

The groups are expected to come up with MTEF proposals and submit them to the Treasury by December 10. In the same month the Budget Policy Statement (BPS) will be prepared and submitted to the Cabinet for approval.

The BPS will be submitted to the legislators by mid February 2014, members of parliament are expected to approve it by end of the same month.