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Shrinking company profits and employee layoffs by struggling firms slashed the taxman’s revenue projection by Sh68.6 billion last year, a new Treasury report has shown.
The two tax categories contributed the most to Kenya Revenue Authority’s (KRA) Sh124.6 billion total shortfall for the 2017/18 financial year, according to the Treasury data released early this month.
KRA collected Sh1.36 trillion in the year, falling below the Sh1.49 trillion target.
Total revenue collection, including fees and penalties levied by government ministries, hit Sh1.49 trillion last year against a target of Sh1.66 trillion. The revenue shortfall raises concerns as to whether the government can raise up to Sh1.949 trillion projected in the current (2018/19) financial year – a 17.5 per cent increase from last year’s target.
Income tax paid by salaried workers in form of Pay As You Earn (PAYE) fell Sh29.2 billion short of target, as “other” income taxes including those paid by companies were Sh39.5 billion short of target.
Revenue collected within ministries and grants from donors (described as appropriations-in-aid or A-I-A) also fell short of target by Sh47.8 billion.
Excise duty, which is payable on consumer goods, raised Sh179.4 billion that was Sh16.9 billion below projection, valued added tax (both local and on imports) was below target by Sh21.2 billion while expected investment income was Sh7.4 billion short.
Wealth is built through a relatively simple equation
Wealth=Income + Investments - Lifestyle