The Kenya Revenue Authority (KRA) has come under sharp scrutiny from senior government officials who have questioned the effectiveness of the taxman’s efforts to plug tax leakages by improving its systems and curbing corruption.
John Mbadi, the Cabinet Secretary for National Treasury, said he would push for an increase in the KRA’s allocation by no less than 30 percent in the next budget, with additional cash being used to remunerate the staff and discourage them from engaging in corrupt activities.
“How do you expect someone to collect money and bring it to you when he has a child, or she has a sick child in hospital?” Mr Mbadi asked.
Mr Mbadi also called for the confirmation of the many staff who had been in acting positions.
Treasury CS also questioned the effectiveness of two technologies that the KRA has relied on, including the iTax and Integrated Customs Management (iCMS).
He described iCMS as “not working” and iTax as “outdated” in a scathing attack on two of the KRA’s critical systems and called for a quick fix.
Mr Mbadi, speaking at the launch of the KRA Summit 2024, emphasised the need for tax authorities to adopt technology-driven solutions that facilitate trade and enhance domestic resource mobilisation.
Prime Cabinet Secretary and Cabinet Secretary for Foreign and Diaspora Affairs Musalia Mudavadi said the government had on its volition engaged the International Monetary Fund to conduct an extensive governance and corruption diagnosic across all ministries and public institutions.
“This diagnostic effort will ensure accountability and transparency, fostering a government that works for all Kenyans,” Mr Mudavadi said.
Corruption has been a persistent problem at the Kenya Revenue Authority (KRA), one of the country’s most critical institutions for generating revenue.
This problem has significant impact on the Kenyan economy, as it can lead to revenue losses, hinder development efforts, and erode public trust in government institutions.
Despite the country having strong macroeconomic indicators, Mr Mbadi wondered why the country’s tax collection was not improving.
“So, where is the problem? The problem is that we are not collecting the taxes that we should collect. Not because Kenyans don’t want to pay taxes, we are probably overtaxing a few Kenyans and leaving the majority of us not paying their fair share of taxes,” said Mr Mbadi.
The poor collection of value-added tax (VAT), which stands at three percent of GDP, Mr Mbadi said, was due to poor tax visibility.
“We are developing a system which must enhance tax visibility,” he said.
The KRA has already rolled out the electronic tax invoice management system (eTims), which is supposed to ensure that all transactions are visible to the taxman.
The KRA collects about Sh17 billion a year in rental income tax, whereas there was a potential to collect at least Sh100 billion annually because the existing system is not “able to see those who are supposed to pay this tax.”
Mr Mbadi said that many professionals—doctors, lawyers, and accountants—have been able to escape the taxman’s dragnet despite making a huge amount of money.
