Rail levy set for review after hitting Sh10 billion

KRA Commissioner- General John Njiraini gestures during a past press briefing. FILE

By EDWIN MUTAI

IN SUMMARY
KRA Commissioner-General John Njiraini said the collection exceeded the Sh6.8 billion anticipated when the Treasury secretary announced the introduction of the Railway Development Levy in the Budget last June.


Importers paid Sh10 billion in the first half of the financial year through a levy meant to help the government repay loans for the controversial Standard Gauge Railway.

Kenya Revenue Authority (KRA) Commissioner-General John Njiraini said the collection exceeded the Sh6.8 billion anticipated when the Treasury secretary announced the introduction of the Railway Development Levy in the Budget last June.

“The total collections of the Railway Development Levy for the period July 1, 2013 to December 31, 2013 was Sh10.05 billion against the target of Sh6.8 billion. The remaining balance to meet the year’s target is Sh3.5 billion,” Mr Njiraini told the Public Investments Committee (PIC).

The House committee is investigating whether the tender for the project, which will cost Sh448 billion over 20 years, followed due process following claims that it was overpriced.

Mr Njiraini, however, said amendments to the Customs and Excise Act were being considered to exempt diplomats, privileged bodies and the Export Processing Zones from the 1.5 per cent levy on all imports for domestic use.

“We have received complaints that the levy is being paid by all, including diplomats, disciplined forces and EAC partner States. The matter is being discussed at EAC forums and between us and the Treasury and it is still not resolved. These concerns have to be dealt with through formal process,” he said.

Mr Njiraini said the levy was not introduced through the East African Customs Act but the Finance Bill 2013, which can easily be amended to take care of the concerns raised.

“We have also complaints on issues dealing with goods that come to bonded warehouses such as those belonging to EPZs that are tax exempt. We also have concerns with goods that are imported through large leased aircraft such as Kenya Airways,” Mr Njiraini said.

He said the levy target would be exceeded by substantial margin after a Treasury set a conservative figure in the first year of introduction.

READ: Treasury collects Sh5bn railway tax in three months

“We are looking at all kinds of technological reforms in revenue collection. The potential for funding the railway project through this kind of levy is quite good,” he said.

Nandi Hills MP Alfred Keter told the committee that the firm picked to construct the Mombasa-Nairobi line was blacklisted by the World Bank in 2009.

He tabled documents to show that China Road and Bridge Corporation (CRBC) “is ineligible to engage in any road and bridge projects financed by the World Bank Group until January 12, 2017.”

According to the documents, the World Bank disqualified China Communications Construction Company (CCCC) Limited and all its subsidiaries, for fraudulent practice under Phase I of the Philippines National Roads Improvement and Management Project.

The ban on CCCC also affected its designated successor - China Road and Bridge Corporation (CRBC) - along with six other firms and one individual.