National Treasury Cabinet Secretary (CS) John Mbadi has revealed that the Kenya Revenue Authority (KRA) system failed for six consecutive days in November 2024.
In an interview on Monday, February 3, Mbadi said KRA failed to meet its target that month after the technical hitch.
“In November there was a system failure for six days. KRA systems failed for six days without collecting taxes. That made fail to meet our target,” Mbadi said.
He said investigations are ongoing to find the cause of the failure but hinted that a staff member could have been involved.
“They are still doing the investigations, there are talks of an insider job. I still don’t know; I am waiting for the results. It was a system failure that really put us under a lot of stress at that time,” Mbadi said.
Mbadi explained that KRA failed to meet its target in July, August and September because of the protest against the Finance Bill 2023.
He said the Authority surpassed its target by Ksh.8 billion in October.
Mbadi on Lowering Taxes
Mbadi said the government will lower corporate taxes, Value Added Tax (VAT) and Pay As You Earn (PAYE) rates if the reforms at KRA start bringing positive change.
He explained that this would be the ideal move since it will spur economic growth.
However, he mentioned that lowering these taxes right now will hurt the economy since the government is still struggling to service debts.
Mbadi explained that any move leading to lower collection of taxes may not be very desirable to the economy at the moment.
“I said the moment we monitor the performance of KRA, and we see that the changes that we brought lead us to enhance revenue collection, then the next step is to reduce the tax rate so that so that we improve people’s purchasing power. We are not clear on how KRA is doing these reforms,” he said.
Also Read: KRA Collects Ksh1.2 Trillion in Taxes, Records 4.5% Growth
Improving Finance Bills
Further , Mbadi announced plans to introduce a finance bill that will make taxation simple.
He emphasized that finance bills must not always have changes in tax rate.
“We should not be coming up with drastic changes in our tax laws which makes even people who are doing businesses in this country to start wondering whether to rely on the tax proposals that we bring,” Mbadi said.
“The government has taken a decision that we will not be moving in that direction.”
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