Ambitious Sh1 trillion tax revenue target to meet growing expenditure

Newly introduced taxes and enhanced revenue collection measures will help the government pocket an additional Sh130 billion, taking the new target for revenue collection to Sh1 trillion.

The new revenue collection target will help seal a revenue shortfall created by the recent raise in salaries for civil servants and increased expenditure on implementation of the Constitution.

Speaking during the tax payers day at Kenyatta International Conference Centre, Nairobi, presided by President Kibaki, Finance minister Njeru Githae said the government will be offering Kenya Revenue Authority all the assistance needed for them to meet the target.

“We are targeting to collect Sh1 trillion this year. If it is a higher agency fee you want, we shall give it. If it is a higher bonus you want, we shall give you,” Mr Githae told cheering KRA officials present.

Teachers and other civil servants have in recent months pushed the government for higher salaries, amounting to over Sh25 billion that had not been factored in the budget.

This years’ national budget is Sh1.4 trillion. In June, the government set a Sh870.5 billion tax collection target, with the balance to be covered through loans and grants from local and foreign sources.
Last year, KRA missed a revised tax collection target of 716.9 billion by Sh9 billion, colleting Sh707.4 billion. The initial target was Sh733.4 billion.

During the reading of the budget, Mr Githae said the overall fiscal deficit for the year is Sh250.3 billion, which would be financed by net foreign financing of Sh143.6 billion and Sh106.7 billion net borrowing from the domestic market.

Increased revenue collection will also help ease pressure on domestic debt, currently approaching Sh1 trillion mark, worrying experts that it could hit unsustainable levels.

The government has come under pressure to increase revenue collection to meet the expanding recurrent budget and maintain its implementation of infrastructure projects, particularly road construction and energy projects.

Devolved units that will take-off from March next year after the General Election will require resources to establish structures and pay elected officials and the workers.

Salaries and Remuneration Commission has already indicated that some of the benefits, particularly for senior officers, will have to be removed or reduced to enable the government meet the huge wage bill.

KRA Commissioner General John Njiraini told politicians to desist from agitating for tax waivers and rebates but instead educate the public on the importance of paying taxes to facilitate service delivery by the government.

“We face the challenge of those in leadership seeking removal of taxes and tax rebates. Tax concessions create negative perceptions about tax payment.” he said.

Among the ways the government expected to raise additional revenue is through reforms in Value-Added Tax, which has come under criticism for its potential of escalating the cost of living through a 16 per cent increase in the price of basic goods.

Those feted for high payment of taxes were Safaricom, East African Breweries and Teachers Service Commission.

Others 40 institutions that included Nation Media Group were also recognised for being prompt in making tax returns and growing national revenue.

Among the new taxes introduced early this month include a 10 per cent excise duty on money transfer and financial services, and on mining.