KRA set to miss Treasury’s Sh1.2trn tax collection target

The Kenya Revenue Authority headquarters at Times Towers in Nairobi. PHOTO | FILE  

By ALLAN ODHIAMBO

In Summary

• KRA’s collection for the eight months to February left it with a deficit of Sh527.88 billion against a target of Sh1.21 trillion set by the Treasury for the year to June.
• The taxman blames the missed collection targets on delayed roll-out of Excise Duty Act 2015 where the government sought to raise an additional Sh25 billion

The Kenya Revenue Authority (KRA) is likely to miss its full-year collection target after realising Sh687 billion with just four months to the end of the fiscal year.

New Treasury data shows the KRA’s collection for the eight months to February left it with a deficit of Sh527.88 billion against a target of Sh1.21 trillion set by the Treasury for the year to June.

The latest poor revenue collection run is a continuation from the successive quarters when the KRA failed to meet its target.

The taxman missed its half -year tax collection target by a significant Sh47.6 billion, with the Treasury indicating that the shortfall mainly arose from a dip in payroll taxes and delayed application of the Excise Duty Act 2015.

The Treasury said by the end of December 2015 there was a huge shortfall in ordinary revenue collection made of a Sh26 billion deficit in Pay-As-You-Earn (PAYE) revenue and a Sh15.9 billion shortfall in Value Added Tax collection from imports.

Although the Treasury did not publish the actual half-year ordinary revenue targets, its data indicated that by close of December the total cumulative revenue, including Appropriations-in-Aid (A-I-A), amounted to Sh575.2 billion against a target of Sh642.9 billion, implying a total shortfall of Sh67.7 billion.

“Ordinary revenue collection was below target by Sh47.6 billion while A-I-A collection fell short of target by Sh20 billion,” the Treasury says in its recently released Budget Policy Statement.

READ: Tough times ahead as taxman misses half-year revenue target

The shortfall in revenue performance over the half-year to December was a continuation from the first quarter when the KRA reported Sh300 billion collection against a target of Sh328 billion.

The KRA blames the missed collection targets on delayed roll-out of Excise Duty Act 2015 where the government sought to raise an additional Sh25 billion to help fund the Sh2.1 trillion budget.

The new tax law was effected in December, pushing up the prices of key consumer goods such as beer, juices, water, second-hand cars and motorcycles.