Kenyan president accuses tax agency of graft as economy struggles

Growing debt repayments, revenue collection shortfalls and high prices of basic commodities have squeezed Kenya’s economy under the Ruto administration.

Kenya's President William Ruto speaks at a press conference at the State House in Nairobi, Kenya May 5, 2023
Kenyan President William Ruto has accused staff at the tax collection agency of working for tax evaders rather than the country [Monicah Mwangi/Reuters]

Kenyan President William Ruto has accused the tax collection agency’s staff of cutting government revenue by engaging in corruption and colluding with tax evaders.

“Collusion, wanton bribe-taking and general corruption continue to pervade operations of KRA [the Kenya Revenue Authority],” the president told KRA’s management and board members at an event streamed live on his social media pages on Friday.

Ruto was elected in August after pledging to uplift the poor but has had a rough time in office so far as growing government debt repayments, revenue collection shortfalls and high prices of basic commodities have squeezed the economy and led to protests.

As of January, Kenya’s external debt stood at $34bn, part of a huge debt profile Ruto inherited from his predecessor Uhuru Kenyatta.

Annual interest payments on domestic debt alone have surged from 180 billion shillings ($1.34bn) nearly a decade ago when the debt binge started to 680 billion shillings ($5.09bn) this year, heaping pressure on the government’s cash flow, presidential adviser David Ndii said in April.

Public service employees have complained of delays in salary payments in recent months while local authorities have threatened to shut down their operations to protest against delayed cash disbursements from the national government.

Ruto charged on Friday that government efforts to boost tax collections are being hampered by unscrupulous KRA staff who spent their time helping corrupt taxpayers to evade paying.

The agency has yet to comment about the allegation.

Kenyan authorities have been fighting corruption, and the tax collection agency has come under scrutiny. In May 2019, 75 KRA staff were arrested on suspicion of abetting tax evasion and bribery.

On Friday, Ruto also accused the agency’s staff of resisting and sabotaging attempts to digitise revenue collection in the past to prevent the government from sealing loopholes.

“I have to be candid because I have a job to do,” the president said.

KRA has not issued its latest tax collection figures, but local media said it collected 1.57 trillion shillings ($11.5bn) in the 10 months to the end of April, meaning it has just two months to meet the government’s target of 2.1 trillion shillings by the end of June.

In terms of tax collected as a proportion of annual economic output, Kenya has been underperforming other nations like South Africa, the president said.

To shore up revenue, his administration has proposed a raft of tax increases in proposals that will be presented to parliament next month, angering citizens and the opposition.

Source: Reuters