13 June 2019

Kenya: Hard Times Ahead As Govt Seeks Tighten the Tax Noose

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Tough times beckons for Kenyans, as the Government plan to increase taxes, in a bid to generate more revenue.

This follows the release of a whooping Sh3.02 trillion shillings budget estimates-the largest in East Africa. Those targeted in the Government plans to expands its source for revenue include hoteliers, retail and transport.

While tabling the 2019/2020 budget the CS said tax evaders from various sectors will be added to Kenya Revenue Authority (KRA) watch list to ensure the country generates enough revenue.

"To generate Sh37 billion of tax revenue, I propose to extend the tax base to enhance revenue through subjecting additional services such as hotels, sales and marketing and the transporting sector as well," said Rotich.

He further said that the government will continue to fight illicit and counterfeit businesses as KRA further tightens its system.

"KRA will continue to strengthen and upgrade the ICT systems, including the full roll-out of the integrated customs management system which has been delayed for too long while enhancing scanning of containers to detect concealment, he explained.

The tax collector missed its target by Sh61 billion in the last financial year.

In the meantime, the government has downplayed fears that the country's debt has reached unmanageable levels due to what financial pundits say is "uncontrolled appetite" for borrowing. This is despite the debt ballooning to Sh5.5 trillion with projections of Sh7 trillion by 2022.

While tabling the 2019/20 budget, Treasury Cabinet Secretary Henry Rotich said the loans the government has acquired have been used to finance infrastructure and development projects such as ports, railway, roads, energy and water.

"Kenya continues to meet its debt service obligations promptly with no accumulation of debt arrears. Public debt is within sustainable levels and the debt burden is projected to decline over the medium term as we implement fiscal consolidation plan," he mainteined.

He further added that the government will strive to reduce the fiscal deficit which will in turn reduce the country's debt. "We shall continue to remain on this planned path of reducing the fiscal deficit in the medium term in order to create more fiscal space and to reduce the public debt," added Rotich.

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