Kenya increased its income from sources other than tax by more than three quarters in the previous financial year, as the government sought to diversify sources of revenue, a review of data by Nation Newsplex shows.
In 2016/2017, non-tax income increased 78 per cent from Sh99.1 billion to Sh176.7 billion, according to the 2017 Economic Survey. These figures also represented a 58 per cent rise from 2012/2013, when the government received Sh111.7 billion.
The increase was driven largely by increases in ministerial appropriations in aid, which doubled from Sh62.4 billion to Sh125 billion. These are funds that governments receive in the course of day-to-day operations, for instance by charging fees for various services.
The next biggest increase was in property income, which increased 56 per cent from Sh21.3 billion to Sh33.3 billion. Repayments from lending and on-lending increased from Sh2.6 billion to Sh4 billion.
Fines, penalties and forfeitures increased 13 per cent, from Sh2.2 billion to Sh2.6 billion. In the 2012/2013 financial year, the Judiciary collected Sh1.48 billion in revenues, In 2014/2015, the amount rose 42 per cent to Sh2.109 billion That was 85 per cent of the total amount received by the government in seizures, fines and forfeitures was Sh2.491 billion, according to the 2017 Economic Survey
These increase comes amid increased efforts by government to widen the tax base and increase the number of Kenyans paying taxes, which provided 88 per cent of government revenue in 2016/2017.
While 8.1 million taxpayers are registered in the Kenya Revenue Authority’s Personal Identification Number (PIN) database, 2.9 million actively pay tax, according to a KRA bid advertisement dated February this year. That comes to over a third (36 per cent). The taxman aims to increase the number of active taxpayers to 4 million by 2018.
“The problem about our taxation burden, particularly our income tax, is that falls on very few companies and very few taxpayers. It’s not easy to spread because most of our income comes from informal business, which is very difficult to tax directly,” Mr Owino says.
The vast majority of employment in Kenya is in the informal sector. According to the Kenya National Bureau of Statistics, 832,900 new jobs were created in 2016. Nine in ten of those, or 747,300 were in the informal sector, while another 85,600, about 10 per cent were in the formal sector.
As of July 20, 2017, Kenya’s ratio of tax to gross domestic product was 19.3 per cent, KRA described is described as second highest among all non-oil economies in Africa and the highest East Africa. 2015 figures from the World Bank also show Kenya’s ratio (16.3 per cent) to be the highest among members of the EAC.
However, Namibia had the highest ratio at 33.4 per cent, Seychelles had 28.3 per cent and South Africa 27.2 per cent.