Kenya's tax revenue hits Ksh1 trillion mark in 2023/2024

Kenya's fiscal year 2023 to 2024 has been marked by a significant surge in tax revenue, crossing the trillion-shilling mark, indicating a robust compliance mechanism in place for tax collection. Johnson Nderi, a financial analyst from Kenya, discussed the country's tax system and redistribution policy with CNBC Africa. The tax collection mechanism in Kenya is well-structured, with income taxes collected quarterly and VAT and excise duties collected upon sale. The government's use of an e-portal for sales registration provides real-time insights into revenue generation for corporations, ensuring effective revenue collection. Despite the increase in tax revenue, there have been criticisms regarding transparency in redistribution and equitable impact on social welfare in Kenya. The aggressive drive for revenue collection has been primarily fueled by the country's debt situation, which has led to underfunding of essential social programs such as the National Health Insurance Fund and education sector. Debt servicing has been prioritized over crucial social expenditures, raising concerns about the overall welfare of Kenyan citizens. Johnson Nderi emphasized that the introduction of new tax mechanisms, spanning from individuals to corporations, has widened the tax net in Kenya. While there have been concessions for investments, overall tax collection has been intensified, aiming to address the growing debt burden and reduce dependence on external financial assistance. The fiscal policy in Kenya has faced challenges in managing debt while striving to maintain financial stability, as seen through the issuance of euro bonds and the pressure on fiscal management. The need for effective tax collection extends beyond funding public provisions; it plays a vital role in enabling countries to manage their debt levels and lessen reliance on foreign aid. A well-functioning tax system not only supports government operations but also contributes to sustainable economic growth and development. As Kenya navigates its fiscal challenges and strives for greater financial independence, the role of tax revenue in shaping the country's economic landscape remains critical.