The impressive growth from July to September 2011 was registered against a backdrop of harsh economic conditions characterised by runaway inflation, a volatile exchange rate and a poorly performing stock exchange.
“The slowing economic growth and unfavourable macro-economic environment adversely affected revenue collection during the first quarter of 2011/2012. However, KRA collected Sh161 billion compared to Sh140.4 billion in the first quarter of 2010/2011,” KRA Commissioner General Michael Waweru said.
In a statement, he observed that prior to the first quarter; economic growth was on a declining path with overall inflation rate having accelerated from 15.5 percent in July to 16.7 percent in August and then 17.3 percent in September.
It did not help matters that interest rates were on a steady rise while the exchange rate was fast depreciating to stand at an average of Sh93.40 against the dollar in September.
In spite of the gloomy conditions however, KRA’s various departments posted positive growth with the customs collecting Sh9.2 billion which represented a 17.9 percent rise.
The domestic taxes department saw a Sh11.4 billion increment in revenue growth to Sh100 billion with the roads transport unit generating Sh700 million.
The petroleum sector attained a 3.9 percent growth, a situation the taxman attributed to rising prices of oil in the international market which negatively affected import volumes.
“Indirect domestic taxes registered a decline of 1.4 percent compared to a similar period in 2010/2011 largely due to underperformance of VAT (Value Added Tax) as a result of the rolling back of withholding tax” Waweru said of the category that constitutes excise duty on airtime, sugar levy, land rate and stamp duty.
On the direct domestic taxes front, the performance was impressive having collected Sh68.1 billion buoyed largely by salary hikes in the public sectors and the good earnings from the banking sectors.
Waweru also credited the significant growth during the period to their implementation of initiatives such as the Integrated Tax Management System and electronic filing that enhanced their revenue collection.
However, he did express concerns that the uncertainty in the economy is likely to affect their output in the second quarter running from October to December.
Nevertheless, the tax collector exuded confident that they would achieve their target of Sh186.6 billion for the quarter.
The authority is expected to collect Sh733. 4 billion which is a 15.5 percent growth over the Sh634.9 billion which was realised in the 2010/2011 fiscal year.
“The target consists of Sh696.9 billion of exchequer and Sh36.5 billion of agency revenues,” the commissioner added.