• In the first three months of the current financial year, Kenya Revenue Authority recorded a 12% shortfall.
  • Kenya spends about Sh60 out of every Sh100 it collects as tax to pay off debt, according to the latest regulatory filings.
  • The Treasury now finds itself in a tricky situation and has run out of room to borrow to plug the revenue gap.

The Kenyan taxman has yet again failed to hit its tax collection from salaries, damping government hopes of minting higher revenues.

In the first three months of the current financial year, Kenya Revenue Authority recorded a 12% shortfall in its targeted tax collection from new jobs and salary increases in the private sector.

Acting Treasury Ukur Yattani.
Acting Treasury Ukur Yattani.

President Uhuru Kenyatta’s government through treasury had banked its hopes in KRA raising Sh110 billion ($1.1 billion) from Pay As You Earn (PAYE) in the three months, but the taxman only managed to raise Sh98.1 billion ($980 million).

"Ordinary revenue collection was Sh384.4 billion against a target of Sh444.5 billion, which was Sh60.2 billion below the target," acting Treasury Secretary Ukur Yatani said.

Treasury had also eyed to collect Sh100 billion ($1billion) from incomes, but the taxman came short by Sh18 billion ($180 million) further straining government coffers.

Kenyan Treasury
Kenyan Treasury

The Treasury now finds itself in a tricky situation and has run out of room to borrow to plug the revenue gap. The shortfall underlines the challenges the Kenyan economy is experiencing in creating new jobs and increasing incomes in both the formal and informal sectors.

Last month, Parliament had to come to its rescue and passed an amendment to raise the debt ceiling to Sh9 trillion.

Kenya spends about Sh60 out of every Sh100 it collects as tax to pay off debt, according to the latest regulatory filings.