KRA’S missed col­lec­tion tar­gets a wake-up call

Business Daily (Kenya) - - IDEAS & DEBATE -

Te rev­e­la­tion that the Kenya Rev­enue Author­ity (KRA) once again missed its col­lec­tion tar­gets in the just ended nan­cial year, mainly due to un­der­per­for­mance of pay­roll and cor­po­rate in­come taxes, does o er the clear­est sig­nal that the econ­omy is in di cult ter­ri­tory. The Na­tional Trea­sury’s con­clu­sion is that th­ese two tax cat­e­gories con­trib­uted most to KRA’S ag­gre­gate rev­enue short­fall of Sh124.6 bil­lion for the 2017/18 scal year against a tar­get of Sh1.49 tril­lion. This points to the fact that de­spite the rosy growth gures that have been recorded in the past four years, busi­ness con­tin­ues to strug­gle – pro ts fall­ing with huge job losses. The re­la­tion­ship be­tween cor­po­rate pro­duc­tiv­ity, em­ploy­ment and eco­nomic de­vel­op­ment is a sym­bi­otic one and de­ci­sion mak­ers should al­ways keep an eye on sus­tain­ing an en­abling en­vi­ron­ment to guar­an­tee pro­gres­sion. The busi­ness en­vi­ron­ment in Kenya has been harsh and one can­not an­tic­i­pate any wor­thy con­tri­bu­tion to the econ­omy un­der such cir­cum­stances. To stem a loom­ing eco­nomic tur­bu­lence, those charged with man­ag­ing the econ­omy need to make a few hard de­ci­sions. First, a quick solution must be found to the high cost of en­ery (pe­tro­leum and elec­tric­ity) and credit, which di­rectly a ect eco­nomic pro­duc­tiv­ity, to end the peren­nial cy­cle of missed tax rev­enue tar­gets. Se­condly, the Trea­sury must be re­al­is­tic with its bud­get plans and quit the debt-driven ex­pan­sion path it has been walk­ing in the re­cent past. Rev­enue fore­casts must be real and in con­form­ity with the pre­vail­ing eco­nomic re­al­i­ties to avoid sce­nar­ios where tar­gets are set based on wild am­bi­tion, and are missed, leav­ing bor­row­ing as the only op­tion to run gov­ern­ment. Fi­nally, the State must nd a last­ing and e ec­tive solution to rev­enue leak­age, pil­fer­age and theft of the very scarce re­sources it man­ages to col­lect and in­vest in vi­able project with good re­turns to im­prove the health of pub­lic nance. It is en­cour­ag­ing that the Trea­sury has moved to cre­ate a new agency to vet and ap­prove new pub­lic projects val­ued at more than Sh100 mil­lion. This should help ad­dress some of the chal­lenges aris­ing from un­re­al­is­tic bud­gets and elim­i­nate use­less spend­ing that only strain the tax­payer.

The Trea­sury must be re­al­is­tic with its bud­get plans and quit the debt-driven ex­pan­sion path

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