Nakuru residents at the Kenya Revenue Authority, during the launch of
iTax Support Centre, Nakuru County on September 2, 2015. FILE PHOTO |
NMG
Kenya’s web-based tax payment system iTax has failed to help the
country reach its revenue collection target, said a World Bank report.
In
the report released this month, the World Bank cites lower
profitability in the corporate and banking sector as well as
inefficiencies in remitting income tax by state-run corporations
experiencing cash flow difficulties.
“The recent
administrative measures to support domestic revenue mobilisation,
including integration of iTax and Integrated Financial Management
Information System, rollout of integrated Customs management, and
expansion of tax bases, are yet to yield the envisioned revenue
increases,” the report states.
Four years after the
introduction of iTax, domestic revenue collection is still
underperforming, especially for income tax and VAT — which, at 70 per
cent of the total, are Kenya’s largest source of tax revenue.
“Total
revenue as a share of GDP fell to its lowest level in a decade, and tax
revenue fell to 15.4 per cent of GDP in 2017/18, from 17.1 per cent of
GDP in 2016/17. This is attributed to underperformance in both income
tax and VAT," says the report.
According to a 2010 GIZ
study on tax evasion and tax avoidance in developing countries, low
compliance is due to several reasons, including low tax morale (where
the quality of public services provided affects willingness to pay
taxes), high compliance costs, and weak enforcement of tax laws.
The World Bank report says the trend in Kenya suggests that the
country’s capacity to mobilise more revenue is not being fully utilised,
and proposes enhanced administrative measures such as better
interconnectedness between various government data.
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