NAIROBI, Kenya, Jun 13 – The government plans to raise Sh1.3 trillion in revenues to fund the 2013/2014 financial year’s budget.
National Treasury Secretary Henry Rotich said Sh961.3 billion will come from ordinary revenue while Sh67 billion will be expected from donors in form of aid.
Delivering the budget statement in Parliament on Thursday, Rotich said the total revenue estimates represent an increase of 7.5 percent from the current financial year.
“The targeted revenue is predicated on projected economic growth, but takes into account the challenges we have had in the past two years especially with collection of VAT. We, therefore, expect to scale up the ongoing reforms in tax policy and administrative measures, to seal out loopholes and ensure sustainability in domestic resource mobilization,” Rotich stated.
Some of the tax measures highlighted by the Treasury include, facilitating infrastructure development for a competitive economy, encouraging growth of Industries for faster development and ensuring equity and fairness in our tax system.
Others are deepening tax reforms and enhancing tax administration and further strengthening financial systems for sustainable development.
The secretary said all the measures will be introduced in Parliament through the Finance Bill 2013.
Rotich has directed the Kenya Revenue Authority (KRA) to automate its tax management systems by December this year, to help seal tax loopholes.
“Last year the then Minister for Finance directed KRA to ensure all landlords earning rental incomes pay their due share of taxes to the exchequer. I have once again directed KRA to leverage on technology, map out all rental property in urban areas and put in place a robust institutional framework for bringing all these landlords into our tax net,” Rotich said.
The Treasury also plans to re-introduce the contentious Value Added Tax (VAT) Bill in Parliament with an aim of what he termed as simplifying, modernising and reducing the cost of compliance.
It is unclear whether the National Treasury which aims at collecting over Sh10billion if the Bill is passed into law, will include the increase of VAT on some of the house holds commodities which raised uproar leading to the Bill being strongly opposed.
“We have initiated a process to review the organisation of KRA with a view to refocusing Customs Services to its primary mandate of trade facilitation and effective border control,” he pointed out.
Speaking to Capital FM News, a tax expert from KPMG Peter Kinuthia said he is optimistic that the government is able to hit its revenue targets especially due to focus on infrastructure, job creation and support to SMEs.
“Building on what they have managed to collect in the past, this is achievable. KRA just needs to put its house in order because we have too many people outside the tax bracket who can make its work very easy,” he said.
However Rotich did not clarify on the Treasury’s efforts to include the huge number of Kenyans in the informal sector in the tax bracket.
The government has pledged to create one million jobs per year and lift at least 10 millions Kenyans out of poverty.