What’s the bigger Picture?

The taxman has managed to hit and in fact surpass its set targets recording some of the highest revenue performance. In the latest tax performance update released recently, KRA said it collected Ksh.154.3 billion in October 2021 against the target of Ksh.142.2 billion. Cumulatively, since the financial year 2021/2022 began in July until October, the taxman collected Ksh.631 billion against a target of Ksh.603.9 billion recording a good performance rate of 104.5%, a growth of 28.3 percent and a surplus of Ksh.27 billion. Despite the slow economic progression as at July 2021, KRA managed to commence the financial year on an upward trajectory. This is good news to the government since it receives more income for allocation to various sectors and projects. Businesses also make profit from this since more finance is channeled to investment, infrastructure and provision of essential services for citizens as well as setting the right price incentives for sustainable private-sector investment.

The good performance has been enhanced by the sustained implementation of compliance efforts, revenue enhancement initiatives, improved service delivery to taxpayers and enhanced debt recovery program.

However, in the pursuit of taxes and more revenues, the taxman could be facing the paradox of receiving more taxes and yet crucifying the taxpayer. On 2nd November 2021, KRA raised duty on excisable goods by 4.97 percent in line with the average annual inflation for the financial year that ended in June 2021. The problem with this adjustment is that the manufacturer is expected to push this additional costs to consumers, piling strain on taxpayers who are yet to recover completely from the Covid-19 pandemic shock.

The growth in revenue and the measures put in place by KRA to achieve this is commendable. Although, taxman is also demanding for taxes which turns out to be costly to the business rather than normal remission, at the cost of the welfare of the genuine common citizen grappling to make their business run.

There are companies being closed down by the taxman in tax disputes to ensure that they strictly adhere to tax compliance requirements or till they pay their penalties and interests. What if the taxman opted to sort out the difference using out-of-court mechanisms like the ADR (Alternative Dispute Resolution)? There is tension among taxpayers concerning the disclosure of private wealth and making investment decisions. There are risks of inflations and abnormal hike in prices, especially the prices of basic goods and services such as bread, access to financial services and many more. It is a good thing to render to the taxman all tax dues but under the conducive and favorable conditions lest in the quest to expand tax base and increase taxes, KRA ends up losing in the long run.?