This archive report was first published on 25 June 2021.
On June 25, 2021, the Kenya Revenue Authority (KRA) unveiled ambitious plans to collect Sh6.8 trillion over the next three years, with a goal of expanding the tax base from 6.1 million to 8.1 million taxpayers.
While the effort to tap into the 'informal' sector and small and medium enterprises (SMEs) is commendable, KRA must also focus on improving tax enforcement. This includes targeting corporate tax cheats and closing exemption loopholes.
Established in the mid-1990s, KRA was created to streamline tax administration by minimizing politicians' discretion in tax enforcement. Prior to KRA, the Finance Ministry issued numerous exemptions to well-connected individuals and firms, resulting in a massive decline in Finance Ministry Legal Notices of exemptions.
However, KRA must remain true to its mandate by ensuring that big firms and high net worth individuals pay their fair share. Exemptions must be minimized, and the authority must prioritize effective service delivery.
Aggressive enforcement alone will not be enough; KRA must also boost tax morale by convincing taxpayers that they are getting value for their money through reasonable regulation and public goods and services.
Ultimately, KRA should lobby the National Treasury and the wider government on behalf of taxpayers, helping them succeed in a thriving economy that is the surest way of increasing tax revenue.
