Nairobi — Treasury Cabinet Secretary nominee John Mbadi says raising taxes is not the solution to increasing revenue.
Appearing before the National Assembly appointments committee, Mbadi instead advocated for Kenya Revenue Authority (KRA) capacity building to improve collection.
Mbadi stated that transformation at KRA will improve the current tax collection from 14 percent to 18 percent of the Gross Domestic Product (GDP) so as to reduce the fiscal deficit.
The house team chaired by Speaker Moses Wetang'ula, brought him to task to explain how the government will finance its budget since he has previously opposed plans to increase taxes as a means to raise revenue.
"I don't think introducing new taxes will be the solution. KRA just needs reengineering because we are losing a lot in custom duty because of smuggling and counterfeits that leads to leakages," he told MPs.
The National Treasury and Economic Planning nominee promised his first undertaking will be initiating plans to revamp KRA saying it's the weak link in revenue raising strategies in the country.
"We should provide a proper evaluation of KRA. My first meeting will be about how to reform KRA because, without them, we will not achieve much," pledged Mbadi.
The Public Accounts Committee Chairman advocated for Kenya Revenue Authority (KRA) capacity building to improve collection through adopting previous strategies like recruiting tax experts through trainee programs.
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Despite being an opposition member and previously critical of President William Ruto's tax strategies, Mbadi has pledged to drive change following his nomination to the cabinet by President Ruto.
"KRA had a good policy of graduates of tax experts who are properly trained. My first task is to reform the institution because the was at time we were collecting 18 percent but now we are doing 14 percent," he averred.
Mbadi pushed for automation of systems with the tax collection system to curb tax leakages and corruption in the revenue collection system.
"We must make sure that we automate it and automate it properly. Sometimes we pretend to be using automation yet we use outdated systems, systems that are aiding the leakage of revenue instead of helping," he said.
KRA fell short of its ambitious tax collection targets for the 2023/2024 fiscal year despite an 11.1 per cent increase in overall revenue to Sh2.407 trillion.
KRA targeted to collect Sh2.768 trillion by the end of the financial year 2023/2024. It was reviewed downward to Sh2.5 trillion, meaning KRA missed the two targets.
The taxman failed to reach its target, leaving policymakers and industry stakeholders concerned about the underlying factors driving this under-performance.
The struggle to meet revenue targets comes at a critical juncture, as Kenya navigates a period of economic uncertainty marked by soaring inflation, currency depreciation, and weakening consumer demand.
