New Internet and Taxes on Phone Calls Increase Collections by 31%
- The Kenya Revenue Authority (KRA) collected 247.18 billion shillings in July and August compared to 188.08 billion shillings in the same period a year ago, Treasury Secretary Ukur Yatani reported last Friday in income data.
- The increase in taxes of 59.10 billion shillings can be attributed to the gradual resumption of economic activities such as education and tourism, which were virtually halted last year.
Tax revenues in the first two months of the fiscal year jumped 31.42%, reflecting a pickup in economic activity and the impact of new taxes on phone calls, internet use and loans.
The Kenya Revenue Authority (KRA) collected 247.18 billion shillings in July and August compared to 188.08 billion shillings in the same period a year ago, Treasury Secretary Ukur Yatani reported last Friday in income data.
The tax increase of 59.10 billion shillings is explained by the gradual resumption of economic activities such as education and tourism, which were all but halted last year as public health authorities implemented measures to stem the spread of the coronavirus.
Kenya was hit hard by the pandemic early on, but its economy recovered after contracting 0.3% in 2020.
The jump also came following an increase in excise duties on airtime and data to 20 percent from 15 percent, the reintroduction of the 16 percent value-added tax on cooking gas and a 20 percent excise tax on fees and commissions charged on loans in July.
The impact of the new tax measures for July was felt in August as the law requires VAT and excise receipts to be filed and paid by the 20th of the following month.
Treasury data shows August taxes increased 34 percent to 125.35 billion shillings from last year, more than 28.87 percent increase in July collections to 121, 83 billion shillings.
ABOVE THE TARGET
“Thanks to the (tax) reforms we have put in place over the past few months, the Kenya Revenue Authority has exceeded the target. Every month we have raised nearly 5 billion shillings above the target, ”Yatani said on September 9.
“This is very positive, which means that we will have the ability and the will to finance our budget and reduce borrowing. We want to continue reducing our budget deficit so that we can live within our means. “
Data from the Treasury, however, show that debt repayment spending rose at a faster rate of 60.72 percent to 162.37 billion shillings in the two months of this fiscal year from July through compared to a year ago.
This means that an equivalent of 65.69% of tax revenue was allocated to debt service, compared to 53.72% the previous year.
The Treasury has been bullish on the economic outlook, forecasting growth of more than six percent this year compared to a contraction of 0.31 percent last year, in part boosted by the resumption of education activity.
“We are now back to business, the schools are up and running and a lot of activity revolves around the education sector. We are therefore very confident that these will contribute to our economic growth, ”Mr. Yatani said.