Why KRA is mulling name change in its rebrand plan

Kenya Revenue Authority (KRA) board chairman Francis Muthaura. PHOTO | KANYIRI WAHITO | NMG

By CONSTANT MUNDA
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Summary

• The board chaired by the former head of civil service Francis Muthaura is planning a major rebrand that could see the taxman renamed the Kenya Revenue Service (KRS).
• Mr Muthaura, who has worked in the public service all his career, spoke to the Business Daily on the thinking behind the proposed name change and other key changes.

Over the past 17 years, the Kenya Revenue Authority (KRA) has sought to improve its relations with the taxpayers through interactive activities across the country during its annual Taxpayer’s Month in October.

Now the board chaired by the former head of civil service Francis Muthaura is planning a major rebrand that could see the taxman renamed the Kenya Revenue Service (KRS).

Mr Muthaura, who has worked in the public service all his career, spoke to the Business Daily on the thinking behind the proposed name change and other key changes.

What are some of the key governance skills you have tapped from your long-standing career in civil service, having risen to the apex as head of public service and secretary to the cabinet?

Collectively, I have served the Government of Kenya from 1972 thereby gaining experience in all levels of governance. I have had the rare opportunity to serve under all the four presidents who have governed Kenya since independence.

As a diplomat, I was privileged to get very wide global exposure in various disciplines of governance. My first appointment was at the United Nations in New York, the centre of global diplomacy. That helped me a lot in terms of understanding the challenges that confront both developed and developing countries.

I also got to understand the importance of national governance as a key tenet that advances the interests of the citizens.

In addition to serving in New York, I worked at the European Union (EU) Headquarters in Brussels, where I witnessed the advancement of the integration of the EU. This experience was of high value to me when I was appointed the first Executive Secretary of the East Africa Community.

My title later changed to Secretary-General after the signing of the treaty that established the Community, a process that I spearheaded.

Your transfer from Lapsset Corridor Development Authority to the KRA Board in may 2018 appeared controversial following the revocation of the appointment of your predecessor dr Edward Sambili.

Changes to the board are the responsibility of the appointing authorities. You should also know that former chairman of the KRA board Edward Sambili is a very good friend of mine. We worked together as permanent secretaries.

Board changes are a daily affair and it is the President’s and the Cabinet Secretaries’ mandate to make whatever adjustments they want. Boards are adjusted for various reasons and board adjustments are a management issue aimed at building the required capacities, cohesion and teamwork.

There are, therefore, a lot of reasons why boards are adjusted.

What was the reception like?

Two of the current KRA board members served in the former board and when I came in, I didn’t experience or sense any crisis or major issue. My experience during my induction was quite the opposite of what the media portrayed of the KRA then.

Your board is planning to rename KRA to Kenya Revenue Service (KRS). Why is this important?

The term “Authority” sometimes has a connotation of a command. It is like we are in a command position. Commanding is not the real role of KRA. We are the servants of the people who are the taxpayers.

We are giving them services. We are working with the people and it is for this reason that we strongly believe that our role is of service delivery to the people.

What are some of the key changes the taxpayers can expect when the rebranding is finally done?

Our goal is to perfect service delivery to the taxpayers and build relations founded on trust in order to optimise revenue collection without necessarily recommending more taxes. Our moment of joy is to perfect service delivery to the extent that we are able to collect adequate revenue with the tax policies already in place.

The other focus point is to ensure that we have a tax regime that is good for the economy. We have geared up towards expansion of the tax base as a tool for establishing a stable equilibrium in the taxation equation.

In other words, we are looking at a tax regime that is conducive for business and economic transformation while at the same time enabling us raise adequate revenue to finance our country’s development agenda.

How do taxpayers benefit from taxpayers’ month which you have held in October for 17 years
now?

The Taxpayers’ Month enables the KRA to interact more with taxpayers. We interact with the public to offer them an opportunity to understand what we do and why we do it.

For instance, we educate them on matters such as tax base expansion, tax payment and invite them to table their ideas on the best way to collectively enhance tax administration processes. We also learn a great deal from them.

KRA has struggled to expand the tax base, and there’s a general feeling you continue to ‘milk the same cow’.

People talk about over-taxation and new taxes but hardly talk about the services the government is expanding. You cannot talk about national debts without looking at expanding our tax base.

You can’t say we are overtaxed and, at the same time say, our national debt is running out of control. The issue here is we weigh ourselves against the global comparative figures.

Our tax, measured against the GDP (gross domestic product) is now at about 16 percent. The standards set by the IMF [International Monetary Fund], which is a comparator of all other countries, advise that a country of Kenya’s level of development should generate 20 percent of revenue to GDP.

Going by the IMF recommendation, we are way below at 16 percent.

But do Kenyans get value in terms of service delivery for the taxes they pay?

I don’t know if Kenyans are aware that in the Scandinavian countries, people are taxed at a rate exceeding 50 per cent because their government gives very high standards of services. So, to say we are overtaxed without looking at the services given by the government to the public is really not a very good argument.

We have to weigh the quantum of taxes against the quantum of services being rendered.

Looking at the East Africa context, Kenya raises more taxes than any other country in the region. Compared to the rest of East Africa, the scope of the Kenyan services, infrastructure and security system is much more advanced than all those other countries.

We cannot talk about taxes without looking at the other side of the equation to assess whether we are overtaxed or not. The answer is no, Kenyans are not overtaxed.

Don’t you feel some sectors are taxed more than others?

The problem we have now, which we are addressing, is that our tax system does not cover all possible sectors. There are very few sectors that pay a lot of taxes. They include manufacturing, banking, energy and communications. That’s where most of our taxes come from.

However, there are other sectors which despite accounting for a substantial share of the GDP, tax contribution is not commensurate with the taxes paid. For example, the agricultural sector accounts for more than 24 percent of the GDP but contributes about three percent of the taxes.

How can the tax base be expanded?

We have a very big informal sector in this country, but the amount of taxes collected from there are very insignificant. In light of these challenges, we have to expand the tax base and invest more in the sectors that do not pay taxes so that they are more productive and can be taxed.

That is why you see a lot of money going to infrastructure and security so that these other sectors can come up.

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