The Institute of Certified Public Accountants of Kenya (ICPAK) today launched the Kenya’s Revenue Analysis 2010-2015 Report at a Nairobi Hotel..
ICPAK is a statutory body of accountants with the mandate to develop and regulate the accountancy profession in Kenya. The Institute is further mandated under Sec 8 of the Accountants’ Act of 2008 to advise the Cabinet Secretary for Finance on matters relating to governance and accountability in all sectors of the economy.
As Kenya’s budget continues to grow in trillions of shillings, there is need to put up a healthy fiscal management system that ensures stable revenues over time, improves equity and efficiency of taxes and, promotes investment towards economic growth and increased national income.
This report provides a timely presentation of a trend analysis of revenue growth as well as tax revenue yield over the past five years in a bid to inform budget planning and monitoring processes in Kenya. It highlights the growing variance between revenue targets and actual exchequer collections which has been occasioned by among others, substantial increases in public expenditure which has led to exerting commensurate pressure on the revenue targets.
The report affords recommendations critical in informing policy makers on the appropriate revenue raising mechanisms to implement to ensure the country meets its revenue projections. It recommends the adoption of the following among other measures to boost the country’s revenue raising capability; reforming the regime on direct taxes through the implementation of means tested tax incentives and a review of the Income brackets, shifting revenue reliance away from direct taxes, addressing the progressivity of VAT through the application of a graduated approach to VAT and planning for public expenditure in light of revenue generation capabilities.
We further observe that tax payer compliance is critical to achieving and meeting the revenue targets. However, the same is strongly influenced by the perception of where the tax payer’s resources are being applied. We are of the opinion that proper utilization of revenue generated from the taxpayers will inevitably raise the tax compliance rate in the country. We trust that going forward, as a country, we shall cut our deficit financing and provide financial oversight to ensure that wastage and poor management of public resources is met with accountability for these actions.
Click on the attachment below to access the report