KRA wants budget capped at 2pc of revenue targets
Kenya Revenue Authority wants its annual budget allocations pegged at least 2 per cent of its revenue targets.
According to the taxman, its current allocation is barely enough to meet staff costs in the wake of mounting pending bills and wants a decision made to cushion the taxman.
Despite justifications, however, KRA says that the proposals for an anchor on the revenue targets put on them, has been swept below the carpet despite giving necessary justification. Commissioner General Humphrey Wattanga in submissions to members of parliament said that KRA funding need to be appropriately entrenched in law in order to address the perennial challenge.
For instance, he pointed out that the initial budget allocation to KRA of for the current financial year of Sh24.8 billion, was inadequate to support staff costs and operations for the full Financial Year with a projected deficit of Sh12.4 billion.
Of these Sh10.5 billion is directed towards recurrent expenditure and Sh1.9 billion for development.
“The Authority has severally submitted proposals on KRA funding for consideration in the Finance Bill to fix the funding in the KRA Act at a minimum rate of 2 per cent of Revenue Targets. The proposal has however not been approved despite justification presented,” Wattanga told the finance committee.
The Authority blamed the Treasury over the low allocation that has hampered its efforts to clear its pending bills. The taxman has accumulated bills amounting to Sh9.45 billion, comprising Sh4.98 billion in pending bills and Sh4.47 billion in Excisable Goods Management System debt.
The pending bills include Sh1.2 billion owed to staff medical service providers, Sh792 million for ICT system licenses and maintenance, Sh522 million for office rental leases, Sh796 million for scanner leasing and maintenance contracts, Sh173.9 million for insurance expenses.
KRA owes a further Sh867.7 million for electronic seals maintenance (RECTS), Sh183.2 million for motor vehicle running, leasing, and repairs, and Sh424.1 million for utilities and general supplies. The pending bills are attributable to the delayed disbursements and inadequate funding.
Additional funding
Wattanga told the Kimani Kuria-led committee that the situation has been further aggravated by the reduction in the additional funding allocation by Sh3.5 billion from the earlier amount communicated.
“Against the KRA ideal requirements submitted earlier for funding of Sh57.3 billion, the deficit in funding was Sh32.5 billion. The ideal requirements included the additional staff requirement items and programs to facilitate revenue enhancements,” added the Commissioner General.
The taxman is now calling for its budget allocation to be increased to Sh35 billion in the new fiscal period as the proposed allocation for is insufficient to cover its staff costs and operational needs. KRA records show that, a non-disbursement of Sh7.1 billion of the allocated budget funds for the 2022-23 financial year (including Sh2 billion for EGMS Debt) was not disbursed leading to an increase in pending bills.
“In that 2022-23 financial year there was a budget funding allocation of Sh2 billion for the partial settlement of EGMS debt which was not disbursed. The Authority has prioritised part of the amount in the current financial years additional funding,” said Wattanga.
