BY SILAS APOLLO
The government has been asked to create more employment opportunities for unemployed Kenyans to expand the country’s tax base.
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Controller of Budget Margaret Nyakang’o says that the move will help increase revenue collection in the country amidst growing concerns of a possible plateauing of taxes in the coming months.
Nyakang’o, in her report on government expenditure for the first three months of the 2023/24 financial year, argues that increasing taxes on ordinary Kenyans instead of expanding the tax base is counter-productive.
The CoB argues that an analysis of the government’s revenue collection for the period under review indicated possible declines in collections due to a decreased purchasing power among Kenyans.
She argues that in the 2023/24 financial year, the government, through the National Treasury, projected to raise Sh4.13 trillion as revenue receipts to fund development, recurrent activities and county governments as equitable shareable revenue.
And in the period under review, receipts into the Consolidated Fund were Sh745.36 billion, representing 18% of the annual target compared to 19.2% recorded in a similar period last financial year of Sh681.30 billion, recording growth in absolute terms.
Revenue collection in the period, however, Nyakang’o says, was below the targeted 25% in the first three months of the 2023/24 financial year.
“The shortfall in revenue collection results in delays in financing government programmes, affecting the delivery of services to the citizens based on promises by the government of the day,” Nyakang’o says.
And to help bridge the gap, Nyakang’o recommends that the government, through the Kenya Revenue Authority, enhance revenue mobilisation strategies.
These include creating more employment opportunities for the unemployed Kenyans and bringing more people into the tax bracket, unlike increasing taxes for the employed Kenyans, which erodes the purchasing power, resulting in counter-productivity.
She further argues that the National Treasury should realign the budget through supplementary budgeting, early enough to match the revenue trends.
“Section 12(1)(d) of the Public Finance Management Act confers the National Treasury with the responsibility of mobilising domestic and external resources for financing national and county government budgetary requirements,” Nyakang’o said.
“Raising revenue is through domestic revenue collection by the Kenya Revenue Authority, borrowing from domestic and external sources and budget support from development partners,” she added.