By Evans Ongwae
Most Kenyans believe that the government rarely meets its revenue collection targets mainly due to tax avoidance and evasion.
While tax evasion is any illegal step to avoid paying levies due to the government, such as not declaring income to revenue authorities; tax avoidance is the legal means of out-manoeuvring the tax regime by finding ways to pay the lowest rate of tax or none at all.
The abuse of existing tax loopholes through the combination of avoidance and evasion, makes Kenyans believe that this is one of the main reasons forcing the Government to borrow externally to bridge budget deficits.
A majority of the people surveyed across the country in June 2021 by the East African Tax and Governance Network (EATGN), said this was a key reason for why government does not achieve its tax collection targets.
About 31 percent of Kenyans perceive tax avoidance and evasion to be more problematic in achieving annual revenue targets than corruption or theft at 26 percent; poor economic growth at 20 percent; unrealistically high Kenya Revenue Authority (KRA) targets at 14 percent; and the burden from Kenya’s debt repayments at two percent.
Reacting to the findings of the study, titled, Revenue Collection and Economic Justice: Kenya National Tax Outlook Survey – 2021, Oxfam’s Riva Jalipa says people with means are exploiting legal loopholes to avoid paying their fair share of taxes. “They use accountants and lawyers to pay as little tax as possible, or none at all,” says the tax justice strategist.
