Reasons KRA blames government for missing revenue targets by Sh79 billion

Kenya Revenue Authority (KRA) reported an impressive 8.4% growth in revenue collection for the first quarter of the fiscal year 2023/2024.

Despite this positive trajectory, the tax authority fell short of its quarter one target of Sh665.9 billion, recording a deficit of Sh79 billion.

KRA said that one of the significant contributions to the missed target were non-payment of Pay As You Earn (PAYE) by the public sector.

According to the tax man, the public sector missed its target by Sh10.6 billion, while the private sector PAYE was Sh5.5 billion short.

Overall, KRA collected Sh126.5 billion in PAYE a year-on-year from Sh113.7 billion in Q1 of 2022/23.

KRA also faulted the government for allocation of inadequate resources for its operations.

"The allocated recurrent funding plus our expected AIA in the year total to Sh28.117 billion, which is insufficient to support even the current operations, i.e.., staff costs, existing contracted services and other revenue operational costs up to the end of the financial year," said KRA Commissioner General Humphrey Wattanga.

Additionally, the Information and Communication Technology (ICT) sector witnessed a significant decline of 20.7% in instalment remittances, contributing to the overall missed target.

KRA also noted that the economic environment has been unfavorable.

Despite the missed revenue target, the tax man also celebrated key achievements.

The real-time collection of taxes, particularly from withholding tax and excise duty in the betting and gaming sector, saw a remarkable 67% growth compared to the previous financial year.

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The tax amnesty program, rolled out since September 1, also contributed significantly, yielding more than Sh3 billion.

Another key driver of the revenue collection was the successful implementation of the electronic Tax Invoice Management System (eTIMS).

Monthly average collections of Value Added Tax (VAT) surged from Sh21 billion to Sh26 billion, marking a substantial 23.8% increase.

However, in the statement, KRA failed to acknowledge the contribution of the recently introduced housing levy to the growth of

KRA projects that VAT collections for the fiscal year 2023/2024 will reach Sh312 billion.

Looking ahead, KRA remains committed to achieving its ambitious target of Sh2.768 trillion for the fiscal year 2023/24.

The second quarter target is set at Sh684.5 billion, with a required growth of 28.8%.