KRA MISSES 1ST QUARTER REVENUE TARGET BY 79B

The Kenya Revenue Authority (KRA) faced a significant setback, in the first quarter of the current financial year. It fell short of its re...

The Kenya Revenue Authority (KRA) faced a significant setback, in the first quarter of the current financial year. It fell short of its revenue target by a substantial Ksh 79 billion.

Total revenue collection for July- September 2023 amounted to Ksh 586.9 billion, missing the target of Ksh 665.9 billion, reflecting a performance rate of 88.1% and a deficit of Ksh 79 billion.

While the KRA did experience positive growth in revenue collection compared to the previous year, this growth slowed to 8.4 percent due to underperformance in several tax categories.

Reasons behind the Deficit

KRA Commissioner-General Humphrey Wattanga Mulongo presented the reasons behind this substantial revenue shortfall to the National Assembly’s Finance Committee.

Wattanga

The main revenue deficit contributors include non-compliance by certain government entities in remitting pay-as-you-earn (PAYE). Additionally, oil revenue suffered a deficit of Ksh 12.9 billion, marking an 8.6 percent decrease in collections from July to September 2022. Reasons behind this decline include:

• Reduced fuel consumption due to high pump prices
• Ksh 39 billion government tax waivers and exemptions
• Ksh 20 billion reduction in non-oil revenue imports

Other Factors Behind the Revenue Shortfall

Besides the oil deficit, other underperforming sectors include exchequer revenue (Ksh 72.5 billion deficit) and domestic taxes (Ksh 41.7 billion deficit). Customs and Border Control collections, too, resulted in a Ksh 37.3 billion decline. Economic parameters also deviated from expectations, as there was a significant reduction in ministerial expenditure on development projects during the first quarter of 2023/24, which slowed down progress on crucial projects.

The silver lining

Nevertheless, some positive aspects emerged. Withholding income tax saw an overcollection of Ksh 34.4 billion, driven by increased remittances from both the public and private sectors. The private sector showed significant growth in remittances related to interest, management fees, dividends, winnings from betting and gaming, contractual fees, and commissions.

By BNN

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