Job cuts and freeze in new hiring pushed the taxman’s payroll
collection down by Sh34.24 billion below the official target in the nine
months to March.
The Treasury’s third quarter
economic review indicates that the Kenya Revenue Authority (KRA) netted
Sh217.75 billion in pay-as-you-earn (PAYE) tax against an ambitious
target of Sh251.98 billion.
Key segments have put on hold hiring of new staff as political uncertainty persists ahead of the August polls.
The
economy has also witnessed a string of job losses in recent months
affecting nearly all sectors. The job cuts have been witnessed from
retail to manufacturing and financial services sectors.
Soft
drink manufacturer Coca Cola, retail chain Nakumatt, which has
announced plans to trim its branches and Kenya Airways that is
implementing austerity measures look set to shed more jobs.
Similarly,
a number of banks have sent home employees in recent months, among them
Bank of Africa, Standard Chartered, Ecobank, Family Bank, Sidian, and
lately KCB Group, citing a difficult operating environment in the era of
interest rate ceilings.
Official data shows the huge
plunge in payroll collection led to an overall tax collection of
Sh908.94 billion against a target of Sh960.41 billion.
That
represents a shortfall of Sh51.4 billion below the KRA target set for
the nine months at the start of the current financial year.
The
tax collection, however, represents a 15.4 per cent growth at the total
of Sh804.92 billion that the taxman collected in a similar period last
year.
“By end of March, total cumulative revenue
including appropriation-in-aid amounted to Sh908.9 billion against a
target of Sh1.05 trillion,” the Treasury states in its update.
Failure
to hit the official target is expected to further compound financial
stress in a year that Kenya is grappling with a number of contingency
expenditures ahead of the August 8 General Election.
Only
last week, the country announced plans to subsidise millers at the tune
of Sh6 billion to enable them produce and supply maize flour to Kenyans
at a lower retail price of Sh90.
The ongoing heavy
rains have also destroyed basic infrastructure and precipitated
waterborne diseases like cholera in Nairobi and other parts of the
country raising demand for emergency funds.
According
to the quarterly data, the KRA managed to beat collection target on VAT
on charged local goods. The agency collected Sh140.7 billion, or Sh5.9
billion above the official target of Sh134.8 billion.
But at nine-month collection level of Sh115.4 billion, however, the VAT on imports missed its target by Sh9.8 billion.
The
data shows collections of excise duty levied on manufactured products
also overshot the target by Sh160 million at Sh121.4 billion.
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