The Treasury’s third quarter economic review shows that Kenya Revenue Authority (KRA) has suffered a major shortfall in collection of tax from employed persons in the last nine months.
According to the report, KRA has only managed to collect Sh217.75 billion in pay-as-you-earn (PAYE) tax against its target of Sh251.98 billion, Daily Nation reports.
The taxes have been affected by ongoing job cuts and hiring freeze by a number of companies in the country in a move to re-invent themselves and cut down on operational costs.
Manufacturing, retail, and banking sector have been hardest hit by changes in the economy.
For example, leading retail chain Nakumatt has announced massive job cuts across its branches while multi-national soft drinks manufacturer Coca-Cola has announced plans to trim its workforce.
In the banking sector, KCB, Standard Chartered, Sidian Bank, Family Bank, Bank of Africa among others have laid off hundreds of staff in a bid to cut on opertionalization cost.
The banking sector has been on the receiving end after Parliament passed the capping law which requires all banks to give loans with an interest rate of not more than 14 percent.
And with an electioneering period, investors have shied away from investing in the country which may dip the tax collections for KRA.
However, KRA managed to achieve its target of Sh134.8 billion on VAT charged on local goods. The authority collected sh140.7 billion in the last nine months.