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Measures KRA can embrace to raise tax income

Timothy Muriuki @PeopleDailyKe

The budget statement for the financial year 2017/18 read on March 30, 2017 was centered on the theme of creating jobs and delivering a better life for all Kenyans.

To this end, the government set Kenya Revenue Authority (KRA) an ambitious revenue collection target of Sh1.7 trillion. In the six months between July and December, the taxman’s collections were below target by approximately Sh70 billion.

The taxman indicated that  failure to meet the revenue target resulted from a myriad of issues key among them  a prolonged drought and an extended electioneering. 

KRA has often failed to meet its revenue target and this has compelled the government to plug the revenue shortfalls from an expensive mix of local and international debt whose adverse effects on Kenya’s credit rating will be manifest in the long run.

The failure to meet revenue targets begs the question whether the problem lies in the government setting the bar too high or inefficiencies in the tax system leading to revenue leakage. I will not dwell much on the government’s revenue target setting mechanisms today but will largely focus on measures KRA should consider adopting to meet its future revenue targets.

Since the rollout of iTax in 2015, it is commendable that KRA has been on pole position in promoting the adoption of technology to enhance tax administration in the region. Additionally, the Integrated Financial Management Information System (IFMIS) and iTax has enhanced visibility for supplies and payments across the national and county governments thus facilitating tax compliance.

KRA should thus seek to fast-track the rollout of the Integrated Customs Management System (iCMS) in an effort to seal tax evasion loopholes in the customs sector. It should also ensure constant improvements of the iTax system to make it easier for taxpayer compliance. There is sufficient evidence world over to show that adoption of technology in tax administration has always had a positive impact on revenue collection.

There have been reports of counterfeit products in the market, fake revenue stamps, among others, which indicates a weakness in the tax system. Technology and systems with the right control measures and checks in place could deal with such matters and discourage individuals within KRA and taxpayers from diverting  State revenue to their pockets.

The introduction of wealth declaration and lifestyle audits for government staff was a move in the right direction. However, this needs to be enhanced to ensure proper accountability and transparency in terms of how wealth was acquired and severe consequences meted out as a deterrent to  those who may be tempted to abet tax evasion.

KRA should consider adopting a similar approach to the private sector of continuously creating an environment that the taxpayer can engage positively and productively with it.

Taxpayers should be treated more like partners with the authority in the country’s development as opposed to having an antagonistic relationship.  – The writer is a Tax Senior at EY; the views expressed herein are not necessarily those of EY.

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