Tax revenues up but lean times lie ahead

Kenya Revenue Authority collected Sh141.4 billion in the first three months of this year, defying a drop in mobile airtime and cigarette tax income and a weak shilling to return a 14.9 per cent growth from Sh123.1 billion last year.

Statistics released on Thursday show customs department raked in Sh55.1 billion between January and March, 15.6 per cent higher, while domestic taxes realised Sh85.7 billion, a revenue growth of Sh10.9 billion.

KRA collected Sh600 million from road transport in the period, which forms the third quarter of the fiscal year 2010/11, which was a marginal growth of 1.8 per cent.

KRA Commissioner-general Michael Waweru said the fluctuating shilling and uncertainties in foreign exchange rates as well as rising inflation cut collections.

The agency has set a target of Sh641.2 billion for the whole year, 20 per cent more from Sh534.4 billion in 2009/10.

Mr Waweru, forecasting a tough future, said: “The rising food and fuel prices coupled with declining activities at the Nairobi Stock Exchange are expected to adversely affect revenue performance in the fourth quarter.”

Mr Waweru attributed increased tax collections to enhanced audits that had netted Sh500 million.

He said audits would be extended to VAT and other tax segments. Some 24,335 new taxpayers raised Sh89 million.

In the first nine months of 2010/11, petroleum taxes declined 0.5 per cent.

“The poor performance is attributed to the rising prices of oil in the world oil markets which reduced consumption and hence tax ” he said.

A drop in mobile phone calling rates slashed revenues from excise on airtime by Sh1.1 per cent.

“Since the telecoms sector is also a key player in VAT, there was a knock-on effect of reduced VAT,” he said, adding that excise tax was also affected by new taxation in the cigarettes.