Analyst Urges Kenya To Expand Tax Base To Remain Above IMF Revenue Threshold
Umer Jamshaid 7 days ago Tue 16th April 2019 | 06:41 PM
Kenya should expand its tax base in order to remain above the International Monetary Fund (IMF) revenue threshold of at least 15 percent tax to gross domestic product (GDP) ratio, analysts said on Tuesday
Judd Murigi, head of research at ICEA LION Asset Management, said Kenya's revenue-to-GDP ratio fell to 17 percent in 2018, after remaining relatively constant at 18-19 percent between the fiscal years 2014 and 2018.
"The revenue collection rate can still be improved, as has been seen in other developing countries that have significantly enhanced their tax collection by ensuring the war on corruption is won, broadening the tax base via simplifying the tax system, lowering rates and reducing unnecessary exemptions," Murigi said during the release of the April 2019 Investor Pulse Report.
The non-formal sector could be incentivized to pay taxes if they are subjected to lower taxation rates, he said.
Kenya needs to reform its fiscal policies to ensure that development expenditure is prioritized as opposed to recurrent expenditure, he said.
Development expenditure ub 2018 will be at its lowest absolute level since 2013, Murigi noted.