Treasury Admits Loss of Ksh 69 Billion in 1 Year
The government was forced to substantially tighten its spending ways after Kenya Revenue Authority failed to collect taxes to the tune of Kshs 69 Billion.
This amount was lost after the banking industry realized decreased profits and denied the taxman a slice of corporate levies.
The banking industry further demanded approximately Ksh 100 billion in employee reliefs bringing the total missed amount to Kshs 172.4 billion shillings.
According to the Kenya Revenue Authority, these eventualities in the banking industry significantly forced the taxman to miss targets as outlined by the Treasury.
The government had, in the last one year, increased its tax bands by a 10 per cent margin. As a consequence, the relief amount went up from 1,162 to 1,280. This action decreased the amount taxable resulting in lower collection margins by KRA.
“Corporate income tax was below target largely due to lower banking profits explained in part by lower interest income attributed to the interest rate caps, expansion of the tax bands by 10 per cent resulted in a Pay As You Earn revenue shortfall of about Sh10.5 billion,” read the 2018 Budget Review and Outlook Paper.
Additionally, the sectors of agriculture, energy and construction reported low remittances, according to the Standard.
The factors of long electioneering periods in the last financial year and depressed rainfall amounts contributed to the negative results in the areas of construction and agriculture, respectively.
The government has now resulted in designing firm austerity measures as a tactic of covering the Sh 55 billion monetary gap.
Whereas the revenues reported in 2017/2018 represented a 6.2 per cent rise over similar results in 2016/2017 financial year, KRA did not meet its targets.
The taxman now carries the duty of broadening the tax bases to realize its targets and assist the government in achieving its objectives.
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