Kenya’s taxman, Kenya Revenue Authority (KRA) is on a collision course with the World Bank following accusations of running huge deficits in its target.
KRA in response to these accusations said that revenue collection for 2016/2017 financial year has registered an increase.
This financial year, KRA collected Sh1.37 trillion compared to Sh1.21 trillion collected in the 2015/16 financial year. This is a growth of 13.8 per cent.
“The 2016/17 financial year growth represented an improvement over the previous year’s performance of 12 per cent and compares well with the five-year average growth trend of 14.3 per cent,” stated the commissioner for strategy, innovation and risk management Dr Mohamed Omar according to the Standard.
However, KRA in its 16th edition of the Kenya Economic Update report noted that although KRA’s revenue collection grew by that margin, the tax revenues expanded by less than nominal gross domestic product (GDP), which stood at 14.9 per cent.
Therefore, “the tax-to-GDP ratio, a measure of tax collected compared to value of all goods and services produced by a country, fell to 16.9 per cent, being the lowest in a decade.”
In the period under review by the World lender, inflation stood at 8.13 per cent according to data by Central Bank.
But Omar disputed this saying that, “The 2016/17 financial year growth represented an improvement over the previous year’s performance of 12 per cent and compares well with the five-year average growth trend of 14.3 per cent among the highest in non-oil economies in Africa and the highest in the EAC region, where the average stands at 14.8 per cent.”
Despite stable VAT, excise duty, and import duty of 4.4, 2.1, and 1.2 per cent of GDP respectively, further stated the World Bank, the drop in the tax-to-GDP ratio came about by suppressed growth in both personal income and corporate income taxes.