Revenue collection shortfall forces govt to slash 2019-2020 budget by KSh 131 billion ▷ Kenya News

- CS Yattani said the move will help the government avoid making decisions based on false assumptions

- The acting exchequer boss also said the measure will go along way in helping Kenya Revenue Authority (KRA) set achievable targets

- KRA, which targets to net about KSh 1.9 trillion this fiscal year, will see its tax target slashed by KSh 91 billion

- This comes at a time the government's tax base is continuing to shrink as many companies continue to close shop

The government has readjusted its 2019/2020 budget by KSh 131 billion amid fears that the taxman will once again fail to hit its revenue target this fiscal year.

Speaking on Friday, October 25, Treasury Acting Cabinet Secretary Ukur Yattani described the measure as painful but at the same time unavoidable.

According to Yattani, the move was aimed at making the government operate under a reasonable budget and also enable it to set achievable tax targets.

"To avoid going back making budgets based on false assumptions, this time we have decided to be realistic. We have come up with those hostile measures. It is painful but unavoidable, we have no other option," the CS said.

Yattani's remarks came as it emerges that in the first quarter of this financial year, KRA netted KSh 410.5 billion in total Cumulative Revenue against the target of KSh 495 billion. This reflected a shortfall of KSh 84.6 billion.

In Ordinary Revenue collection, KRA fell behind its KSh 444.5 billion target by KSh 60.2 billion to only collect KSh 384 billion.

In the 2019/2020 financial year, the government envisions to collect at least KSh 1.9 trillion as part of the money it will inject in financing its KSh 3 trillion budget.

The CS, however, revealed that the tax target will also be slashed down by up to KSh 91 billion. Out of this amount, KSh 25.3 billion will be reduced from Ordinary Revenue target and KSh 66 billion from other sources of government income.

This comes at a time when concerns are rife about the ballooning public debt which stands at a staggering KSh 6 trillion.

The National Assembly had voted to increase the debt ceiling to KSh 9 trillion, a move Yattani appeared but has since been contested by Senate.

Yattani argued that the country may suffer financially if it does not seek financial aid from lenders.

“I really want you to accept that this is the best proposal for this country. You will still be enforcing the borrowing through the annual budget, this is just a palliative. It will give us an opportunity to handle these expensive loans,” said Yattani.

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