The economic stability of a sovereign state is perched on an effective tax remittance framework, devoid of any revenue leakages.
Tax revenues are the engine that propel the country’s economic prosperity; hence, no taxpayer (anyone with a taxable income) should be allowed to escape the payment of their just share of the burden of contributing to the national kitty.
Taxes facilitate the government in achieving its national objective of providing public goods such as infrastructure and public services such as education, security, health and sanitation.
All taxpayers ought to register in the Kenya Revenue Authority (KRA) tax system, file or lodge requisite taxation information in a timely manner, report complete and accurate information, and pay tax obligations on time.
Where there is wilful violation of tax laws, and there is evidence that confirms that, the KRA implements enforcement action, which includes prosecution.
Despite falling under the category of developing countries, Kenya has exhibited substantial economic potential based on the vibrancy of the economic activities taking place.
The recently released Economic Survey 2019 shows that Kenya’s gross domestic product (GDP) grew by 6.3 per cent in 2018 with growth recorded in all key sectors of the economy.
However, despite the current and projected economic potential, the same has not been reflecting in revenue collection — hence, revenue shortfalls.
Tax evasion has been a key contributing factor to this shortfall.
Research by fiscal and economic think tanks indicates that tax evasion gobbles up billions of dollars in revenues every year, which, consequently, leaves governments struggling to bridge the resulting revenue deficit through borrowing, which comes with conditions from donors. External borrowing undermines our sovereignty as a nation.
A 2015 report by the Tax Justice Network-Africa titled “High Level Panel on Illicit Financial Flows from Africa” indicated that Kenya was losing more than Sh600 billion to tax evasion every year.
This, without an ounce of doubt, is a colossal amount of revenue that could significantly impact on the well-being of the nation if it found its right way to the government coffers.
Sadly, the contemporary figure of the revenue lost to tax evasion could be higher.
Despite the jitters and the ‘discomfort’ which the onslaught on tax evasion has elicited in the recent past, ridding the economy of tax evaders will promote fairness, a key taxation principle.
It is unfair to have a handful of taxpayers supporting national economic development as scores of others evade paying their rightful share of taxes.
Unfortunately, globally, the ratio of the total productive population in a given country to the number of the actual taxpayers is very wide.
The ratio is even wider in developing countries. With vices such as tax evasion on the rise, the responsibility to generate revenues to run the country is left in the hands of a significantly small number of taxpayers from whose contribution the government is expected to fund its projects.
From the aforementioned highlights, it is clear that the war against tax evasion is the only choice at hand if this country is to scale greater heights.
The KRA’s war on tax evasion has so far heralded results. In the 2018/2019 financial year, for instance, the KRA collected Sh8.53 billion after taking 222 individuals to court over tax evasion.
Apart from tax evasion, revenue shortfalls are also occasioned by factors such as tax avoidance, losses made by corporate bodies and tax disputes.
Tax evasion, for instance, is a criminal offence, and, on that basis, can only be handled as such.
But if a taxpayer has a dispute over tax payment, there is an effective alternative dispute resolution framework to tackle such a case.
The onus is on all patriotic citizens to join the governments’ hand to bring down the tax evasion vice for the sake of current and future generations.
Mr Yego is the Commissioner of Investigations and Enforcement, Kenya Revenue Authority (KRA). [email protected] @kracare