Kenya has been on a borrowing spree to finance multi-billion projects that have left it on huge debts burden now being shoved down the throat of Kenyans through taxes. While the law provides that every working citizen must contribute to KRA basket, the taxman through the National Treasury has known no limits to its citizens’ coffer.
The other day, KRA introduced a Turnover tax for small businesses making not more than Ksh 5 Million, at 3% of their monthly gross sales contribution starting this month as the taxman has been falling short of his revenue collection target, from which the national government pays some of its debts and fund projects aimed at making the lives of Kenyans better.
The International Monetary Fund (IMF) is now on the National Treasury’s neck to raise the prices of basic goods by at least 16 percent which the government has scrapped on some necessity goods such as bread, cooking gas, maize, and wheat flour in an effort to tame public borrowing and cut the budget deficit.
IMF’s review of National Treasury and KRA books last year pointed out that sensitive goods and services have doubled since 2013 and are now costing the taxman more than Ksh 478 billion, more than its collection shortfall of Ksh 300 billion.
The financer noted that in 2013, there were 40 exempt goods and 18 exempt services but by last year, 104 goods and 31 services were tax-exempt, while the list of zero-rated had grown to 17 items in 2019.
In 2017, The World Bank undertook a study that revealed Kenya loses 1.8 percent of GDP on corporate income tax and 3.1 percent on VAT a few years after the new government changed VAT laws from varying rates for each good to a flat rate of 16 percent to make the administering of the tax law easier but instead created many exemptions, waivers, reliefs, allowance and loopholes for cheating.