Avoid unrealistic taxes

Auditor-General Nancy Gathungu has cautioned decision makers against decisions that will only worsen the dire economic situation and make it more difficult for the government to meet its obligations. She has called out the authorities over the apparently unrealistic and inadequate revenue planning and forecasting.

According to Ms Gathungu, the Kenya Revenue Authority (KRA) is struggling to meet the National Treasury’s “over-ambitious” revenue targets. KRA has in the first nine months of this financial year collected Sh1.6 trillion, about 60 per cent of the Sh1.98 trillion revenue target. In a presentation to the Budget and Appropriations Committee (BAC) of the National Assembly, she sees the risk of increased borrowing as escalating the public debt, which stands at Sh11 trillion.

KRA would need to collect Sh1.04 trillion in the pretty short time remaining to meet the Sh2.62 trillion projected revenue from direct and indirect taxes and aid, for the current financial year. This is highly unlikely in the current economic situation. It is, of course, going to get much worse, coming at a time when the National Assembly has just approved the government’s Sh3.9 trillion Budget for the 2024/25 financial year. And this is against a revenue projection of Sh2.95 trillion.

The projected revenue includes Sh302 billion expected from the hugely unpopular proposed taxes in the Finance Bill 2024. These have not only sparked public uproar but also been dismissed as punitive even by finance experts and lawyers.

It is a substantive 12 per cent increase from the 2023/24 projection of Sh2.62 trillion. Questions have arisen over the government’s fiscal discipline amid missed revenue targets.

The Budget must be realistic to avoid overborrowing and levying punitive taxes. The people are suffering as the high taxes are not matched by quality public services in health, education and security. This calls for realistic measures.