KRA August tax collections down 18pc at Ksh.93.5 billion

The Kenya Revenue Authority (KRA) tax collections through the month of August fell by 17.9 per cent from a similar period last year to Ksh.93.5 billion.

The lower collections contained in the National Treasury Statement of Actual Revenues and Net Exchequer Issues published on Friday further showed a marginal one percent decline in the collections from July.

Cumulatively, total tax collected across the first two months of the financial year was 15 per cent down from last year’s tally of Ksh.221.4 billion at Ksh.188.1 billion.

The year over year slump in taxes is largely attributable to the continued shock of the COVID-19 pandemic on economic activity as various tax heads fold.

The extended close of bars and entertainment joints has continued to deny the tax man key excise duty streams while the shrinkage of the employed and the collapse of businesses has eaten into KRA’s income tax revenues.

Moreover, recent tax incentives including the lowering of the effective VAT and PAYE rates has carved a hole in revenue collection denying the exchequer in excess of Ksh.172 billion in annual tax streams.

The dampened outlook on tax has prompted the National Treasury to adjust KRA’s collection target for the year.

According to the planning ministry’s draft Budget Review and Outlook Paper (BROP) published on Wednesday last week, KRA ordinary revenue targets for the year will move downwards to Ksh.1.524 trillion from an original sum total of Ksh.1.634 trillion.

“In light of these challenges, the revenue projections for FY 2020/21 have been revised taking into account a lower projection base- Supplementary III (on account of the Ksh 131.2 billion shortfall in FY 2019/20), revenue performance by end August 2020 and the prolonged effects of COVID-19 Pandemic on economic activities and the measures put in place to curb its spread,” the National Treasury noted.

KRA missed its full year mobilization of ordinary revenues to June by 3.1 per cent sourcing Ksh.1.57 trillion against a revised target of Ksh.1.62 trillion.

Ordinary Revenue collection through the first two months of the current financial year (tax+ non-tax income totalled to Ksh.189.8 billion.