KRA protests Sh3 billion Budget cut Due to Higher Tax Targets

When the government increased its targets to meet the Sh3.6 trillion budget in the year beginning in July, the Kenya Revenue Authority (KRA) objected to a budget cut of Sh3 billion.

This comes after the Treasury cut its budget for the fiscal year 2023–2024 from Sh26.3 billion allotted for the current fiscal year to Sh23.7 billion.

“The allocated funding works out to a total funding rate of 0.83 percent for recurrent, which is lower than the total National Treasury funding in the financial year 2022/23 of 1.11 percent,” Nancy Ngetich, acting commissioner general, told MPs.

For the purpose of enabling the taxman to carry out its mandate of revenue collection to finance the Sh3.6 trillion 2023–2024 budget, Ms. Ngetich stated that the KRA’s total expenditure submitted to the National Treasury was Sh57.4 billion, or a two percent funding rate.

According to her, the total shortfall against the budget submitted to the Treasury in January, excluding projects funded by donors, is Sh34.54 billion, of which recurrent expenses account for Sh31.45 billion and development expenses for Sh3.02 billion.

The KRA Act mandates that the government fund the taxman up to 2% of the yearly revenue collection target, which is set at Sh3.033 trillion for the upcoming year.

According to Ms. Ngetich, the KRA needs Sh7.9 billion to fully implement revenue mobilization programs and activities in order to hit the financial year 2023–24 target of Sh3.033 trillion and the required revenue growth of Sh504 billion.

She claimed that the funds would be used for field operations including staff training, capacity building, compliance, audit, intelligence, investigations, and enforcement, as well as transportation, scanners, and e-Seals maintenance.

“Inadequate funding puts at risk the achievements of the set revenue targets. Of critical importance is the requirement for additional 24 scanners for critical entry/exit points at a cost of Sh2.13 billion through leasing,” Ms Ngetich said.

Ms. Ngetich stated that there is no budget funding for the additional scanners needed for the international airports at Isebania, Namanga, Loitoktok, Taveta, Lungalunga, Lwakhakha, Suam, Harissa, Wager, Moyale, Lokichogio, Moi, and Kisumu when she appeared before the Finance committee to present the KRA budget proposals for 2023–2024.

According to Ms. Ngetich, in the first ten months of this fiscal year, the KRA has collected Sh1.78 trillion against a target of Sh1.908 trillion, resulting in a deficit of Sh128 billion.

She claimed that when compared to the Sh1.662 trillion recorded during a comparable period last year, the amount collected as of April 2023 shows a seven percent growth.

The Sh128 billion deficit, according to Ms. Ngetich, was caused by delays in the Treasury’s payments to counties and ministries to pay off enormous outstanding bills owed to suppliers and contractors.