Treasury Lowers Tax Collection Target by Sh40 Billion Amid Revenue Shortfalls
The National Treasury has slashed its tax collection target for the current financial year by Sh40 billion, citing sustained underperformance by the Kenya Revenue Authority (KRA) and weaker-than-expected economic activity.
In revised figures submitted to Parliament, the Treasury now anticipates collecting Sh2.54 trillion in ordinary revenue by the end of the 2024/25 financial year—down from the Sh2.58 trillion target set in the second supplementary budget.
“The National Treasury has revised its revenue projection downwards from Sh3.018 trillion initially projected in the Budget Review and Outlook Paper 2024 to Sh2.835 trillion in the Division of Revenue Bill 2025 and Budget Policy Statement (BPS) 2025,” Treasury officials told the National Assembly’s Budget and Appropriations Committee.
The move comes after consistent shortfalls in tax collection over the past nine months. Between July and December 2024 alone, KRA fell Sh93.2 billion short of its collection target. This underperformance triggered multiple revisions of revenue projections, first from Sh2.917 trillion to Sh2.63 trillion, and later to Sh2.58 trillion in subsequent supplementary budgets.
As of February 2025, KRA had collected Sh1.624 trillion, leaving the authority with the steep task of raising Sh917.8 billion in just four months to meet the adjusted target. Had the government maintained its original Sh2.917 trillion goal, KRA would now be under pressure to raise a staggering Sh1.29 trillion by June.
The Treasury defended the revised targets in a report dated April 1, stressing their significance in determining county government allocations. “Ordinary revenue performance in the financial year 2024/25 is likely to result in lower ordinary revenue projected for 2025/26,” the report noted.
The total revenue projection for the current financial year has now been adjusted to Sh3.065 trillion, representing 17.6 percent of the country’s GDP. The figure factors in revenue expected from the Tax Laws (Amendment) Act 2024 and the Business Laws Amendment Act 2024.
According to the Treasury, global and domestic shocks have negatively affected economic performance, contributing to the KRA’s underachievement.
This latest development highlights the persistent challenges the government faces in achieving its fiscal goals, with pressure mounting to find sustainable solutions amid ongoing economic volatility.
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Treasury Lowers Tax Collection Target by Sh40 Billion Amid Revenue Shortfalls