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Kenya Revenue Authority (KRA) aims to collect Sh27 billion in revenue generated through rental income tax from the current Sh16 billion this financial year.

The taxman announced that they will partner with the county governments to map out areas with high potential of rental tax, which forms 25 per cent of own source revenue generated by the devolved units, and the highest income earner under property tax.

KRA said that the increase in property tax will raise revenue thus strengthening the financial capacity of counties to improve service delivery to the public.

Tax administration

“We at KRA have been instrumental in supporting national and county governments to improve their property tax administration where about 500 technical staff from 20 counties have undergone target training,” acting Commissioner General Rispah Simiyu said.

Simiyu said the phenomenal growth in the property and real estate sector in the counties is driven by several government initiatives, which include the affordable housing scheme and infrastructural development.

Prime Cabinet Secretary Musalia Mudavadi called out the  counties, urging them to focus on increasing their own source revenue by mobilising taxes from the residents to overcome constraints in external funding which hampers service delivery.

Speaking on behalf of the Deputy President, Mudavadi said that as counties endeavour to collect more tax to fund their operations, devolution will be strengthened further, which will in turn make counties financially autonomous.

Gachagua said that it is the civic duty for residents to pay taxes towards cost-of-service delivery but urged the county governments to ensure accountability and efficient revenue management.

“Ratepayers and consumers of county services will demand better service delivery from the own source revenue collected. Mismanagement of the revenue automatically leads to non-compliance in its collection resulting in poor service delivery,” he said.

Mudavadi further noted that counties must adopt technology to curtail tax evasion while identifying land property that exists in their regions.

He however cautioned the governments from overtaxing investors so as not to scare them away.

“Property owners hide what they own because of taxation. Ensure that you don’t drive the investors out of town through taxes,” Musalia said.

Unconfirmed reports however claim that Kenya locked oil prices at $100 a barrel in the government to government deal and that explains why local prices are rising while global prices are falling, the exchange rate notwithstanding.

Plans to further increase the Value Added Tax (VAT) on fuel from the current 8 percent to 16 per cent in the Finance Bill has sparked criticism from various quarters, as it will undoubtedly burden consumers with even higher fuel costs.

The government’s justification for this increase is yet to convince the public.

The plan to raise VAT on fuel has faced backlash, with many arguing that it will only exacerbate the already strained financial situation for ordinary Kenyans.

Critics argue that instead of passing on the benefits of lower global oil prices to consumers, the government is opting to generate more revenue through increased taxation.

With the continuous rise in fuel prices, Kenyans are grappling with the ripple effects it has on their daily lives. Transportation costs have increased, leading to higher prices for goods and services across various sectors.

This inflationary pressure further adds to the financial burden on citizens, especially those in low-income brackets.

Moreover, the Kenyan economy heavily relies on fuel for its operations, making high fuel prices a significant concern. Businesses, particularly in the transport and manufacturing sectors, face mounting challenges as their operational costs rise. This, in turn, affects their competitiveness both domestically and in the international market.