Mbadi stated that transformation at KRA would improve the current tax collection from 14 percent to 18 percent of the Gross Domestic Product (GDP) so as to reduce the fiscal deficit.
Treasury Cabinet Secretary nominee John Mbadi on Saturday, August 3 placed the reforming of the Kenya Revenue Authority (KRA) as his priority in the event he is approved for appointment.
While appearing for his vetting by the Committee on Appointments, Mbadi made a case for the tax authority, arguing that the solution is not to raise taxes, a remarkable shift from President William Ruto’s administration which has been pushing more for tax hikes to raise revenue.
Mbadi stated that transformation at KRA would improve the current tax collection from 14 percent to 18 percent of the Gross Domestic Product (GDP) so as to reduce the fiscal deficit.
Kenya Revenue Authority (KRA) offices at Times Tower, Nairobi. /FILE
The house team chaired by Speaker Moses Wetang’ula, brought him to task to explain how the government will finance its budget given his stance against plans to increase taxes as a means to raise revenue.
“The solution should be targeting the tax collector. KRA is like a cow that we milk without feeding. The system KRA is using at the moment needs re-engineering,” Mbadi said.
“We must reform KRA. Without that, we are not going to succeed in revenue mobilization. I will sit down with KRA as my first task.”
Furthermore, he pointed out that a state-of-the-art system would be required to seal loopholes that would provide an opportunity for officials to loot money through corruption.
KRA collected Ksh2.4 trillion in the financial year 2023/24, up from Ksh2.16 trillion in the previous financial year. Upon assuming office, President Ruto told KRA to work on doubling its collections to around Ksh4 trillion every financial year to help service debts and fund government projects.
The second revenue-raising measure, according to Mbadi, involves tapping into climate change financing to reduce pressure on the budget, noting that the government can leverage this to fund the Ministry of Environment’s budget, noting that Kenyans will benefit further from such initiatives through the creation of jobs.
“Other revenue-raising measures we must now think through methods that would generate revenue off balance sheets, one of them is climate change financing. Climate change has about Ksh.167 trillion (USD 1.3 trillion), we must tap into that money to reduce pressure on the budget,” said the former Nominated MP.
“(Environment CS nominee) Aden Duale’s budget should be heavily funded by climate change. Kenya has already applied and succeeded in securing USD 259 million which will go to 47 counties, it should also help us create jobs for our youths.”
In terms of handling Kenya’s debt situation, Mbadi argued that the government could raise an additional Ksh600 billion in revenue if the government reverted to tax measures it applied in previous years.