Treasury CS nominee John Mbadi lists 3 ways to collect extra revenue without raising taxes

Treasury Cabinet Secretary nominee John Mbadi has proposed three measures he will adopt to raise extra revenue in the country without raising taxes, if approved to the position by the House.

Appearing before Parliament’s Committee on Appointments for vetting on Friday, Mbadi explained that he will focus on improving the Kenya Revenue Authority (KRA's) infrastructure to improve on revenue collection.

He pointed out that a state-of-the-art system will be required to seal loopholes that provide opportunity for officials to loot money through corruption.

KRA collected Ksh.2.4 trillion in the financial year 2023/24, up from Ksh.2.16 trillion in the previous financial year. Upon assuming office, President William Ruto told KRA to work on doubling its collections to around Ksh.4 trillion every financial year to help service debts and contribute in funding government projects. 

"I don't think coming up with new taxes is the solution to revenue mobilisation. The solution should be targeting the tax collector. KRA is like a cow which we milk without feeding. The system KRA is using at the moment needs engineering," Mbadi said.

The second revenue raising measure, according to Mbadi, involves tapping on climate change financing to reduce pressure on the budget.

He pointed out that the government can leverage on this to fund the Ministry of Environment's budget, noting that Kenyans will benefit further from such initiatives through the creation of jobs.

"Other revenue raising measures we must now think through methods that would generate revenue off balance sheets, one of them is climate change financing. Climate change has about Ksh.167 trillion (USD 1.3 trillion), we must tap into that money to reduce pressure on the budget," said the former Nominated MP.

"(Environment CS nominee) Aden Duale's budget should be heavily funded by the climate change. Kenya has already applied and succeeded in securing USD 259 million which will go to 47 counties, it should also help us create jobs for our youths."

Mbadi also proposed that he will advocate for the adoption of Public Private Partnerships (PPP) on both small and big projects if he is confirmed to office.

He noted that the agreement reduces pressure on the budget as the government involves private sector players to invest in projects and in turn recover their funds through a leasing agreement.

He went to explain that the public has been opposed to such projects because lack of proper communication and transparency from government in making the details public. 

Mbadi referenced the proposal by Adani Holdings to upgrade the Jomo Kenyatta International Airport (JKIA) on a PPP deal that has since been opposed by the public over the secret nature of the deal.

The Treasury CS nominee added that his ministry will involve private sector players to invest in both small and big projects to ensure the projects are implemented in due time and reduce the government budget deficits. 

"We must adopt PPP in our country, but this will be very difficult because the public doesn't understand PPPs. You can see the issue of JKIA because the public doesn't understand it, but PPP is the route to go," Mbadi explained.

"We need to be clear, have the framework in place, I must give capacity because it is resident in Treasury, give capacity to that department dealing with PPPs. Don't just look at big projects, but also apply in small projects to reduce pressure on exchequer."

Mbadi further called for transparency in the budgeting process to reduce on wastage by government officials and account for every coin spent. 

"I hear you, (there is) a lot of opulence. Even the reconstitution of this Cabinet is a direct consequence of show of opulence which made some Kenyans mad to the extent that the President was forced to do certain things which he shouldn't have done. We must contain wastage but we shouldn't be mechanical about it but contain it practically. One of them is reduce our operating expenditure, we must make our budget transparent," he said.