EDITORIAL: Move to simplify filing of tax returns laudable

Editorials

EDITORIAL: Move to simplify filing of tax returns laudable

Monday, February 25, 2019 20:02

By EDITORIAL

The latest effort by the Kenya Revenue Authority to simplify the filing of tax returns is laudable. The taxman says it has configured the iTax system so that salaried workers only need to key in pension and annual relief figures to automatically access their monthly pay data as submitted by employers.

That two-step plan represents a radical departure from the previous practice where the taxpayer had to key in almost every other information already submitted to the taxman by employers. If a taxpayer’s only source of income is employment, there is absolutely no reason to keep on entering information that the taxman already has such as taxable income, employment benefits and gross earnings.

That’s probably the best gift KRA can hand to millions of workers who choose to comply with tax laws every year. Taxes collected from workers, which employers normally deduct in pay as you earn (PAYE) deductions, form a significant portion of the annual collection.

Available data shows that as at the year ended June, the taxman collected nearly Sh180.37 billion as PAYE, a 14.03 percent growth over Sh158.17 billion a year earlier. In that sense, the changes in the iTax can therefore come along as part of efforts to handle the goose that lays golden eggs with care.

The big picture, however, is that tax compliance should generally be a painless experience, just like tax evasion should be made a painful habit.

Those who take their time to pay their dues and file annual returns should be facilitated to do so with ease.

Unfortunately that is not what most Kenyans have come to know the KRA for. Most taxpayers have complained of complex tax laws and repetitive compliance procedures that put many Kenyans off.

Stories are told of small and medium enterprises that have to spend millions of shillings every year to hire consultants that help them to comply with tax laws. Many are taxpayers who miss the June 30 deadline for filing returns, not out of deceit but because they don’t know what to do. In short, let KRA stick to the basics of a good tax system: fairness, adequacy, simplicity, transparency, and administrative ease.