Kenya’s tax income for the first 11 months of the fiscal year 2020/2021 fell by 1.3% to KSh1.313 trillion compared to KSh1.329 trillion collected in the same period last year according to data published on the Kenya Gazette. This is despite the government’s efforts to increase tax revenue by expanding the tax base and introducing new taxes such as the digital tax and minimum tax.
National treasury announced that in May, tax revenue dropped to KSh123 billion from KSh153 billion collected in April, the first month on month decline this year. Some of the factors that may have led to the dip in tax revenue are; decline in corporate earnings and weak economic activity in the past year.
Domestic borrowing amounted to KSh770.6 billion as at 31st May 2021, below government’s estimates of KSh853.8 billion. External loans and grants amounted to KSh124.4 billion, a sharp drop from the KSh214.8 billion collected in the same period last year.
In March, the government signed an agreement with the International Monetary Fund (IMF) in which IMF agreed to loan Kenya $2.4 billion to support economic recovery. Part of the agreement with the IMF required the government to raise tax revenues and control spending in order to lower the amount of public debt to sustainable levels. However, according to the report published on the Kenya Gazette, Kenya has so far not succeeded in raising tax revenue.
Also read: KRA Destroys Illicit Goods Worth KSh1 Billion
