Tax collection fell below target at the end of March 2023 even as collections from government ministries surpassed target.

The latest Quarterly Economic Budgetary Review by the National Treasury says collection of ordinary revenue reached Sh1.686 trillion, but fell short of the set target of Sh1.773 trillion by Sh87.4 billion.

Ordinary revenue is money collected from taxes, levies, royalties, fees, duties, rents, profits and income from any investments or undertakings by the State.

This even as the total revenue increased by 10.9 per cent compared to the previous year,  but the rate of growth was significantly lower than the 22.1 per cent recorded in March 2022.

Mixed reactions

Ordinary revenue collection was Sh1.441 trillion which means it missed the target of Sh1.553 trillion by Sh112.1 billion.

“During the period under review, all ordinary revenue categories fell below their respective targets, with the exception of import declaration fees, which surpassed expectations by Sh1.1 billion,” Treasury said in its latest budget review statement.

Traffic and other revenue categories met their targets as projected, while the revenue figures as the ministerial Appropriations-in-Aid (A-I-A) – which is money collected by parastatals – exceeded expectations to hit Sh244.8 billion against a target of Sh220.1 billion. It surpassed the target by Sh24.7 billion.

“This outstanding performance can be attributed to the timely reporting of Special Audit General’s A-I-A through the expenditure returns for the period,” the report says.

Surpassed target

One notable area of success was the Railway Development Levy collection, which reached Sh29.6 billion, surpassing the target of Sh26.8 billion.

The shortfall in revenue collection raises concerns about the government’s ability to meet its expenditure requirements and maintain fiscal stability. It underscores the need for effective revenue mobilisation strategies and enhanced tax administration.