Nairobi — The Kenya Revenue Authority is on a bold mission: collect over Ksh.4 trillion in the coming financial year.
That’s the target set out in the 2025 Budget Policy Statement, which lays heavy responsibility on KRA to fill government coffers amid growing economic demands. The strategy focuses on expanding the tax base, closing loopholes, and tightening public spending.
“We are banking on policy and administrative reforms to increase compliance and reduce waste,” read part of the Treasury’s statement.
At the heart of the plan is the Medium-Term Revenue Strategy (MTRS) 2024/25–2026/27. This roadmap outlines how KRA will boost domestic revenue without overburdening taxpayers. It aims to bring more Kenyans into the tax system, reduce unnecessary tax exemptions, and strengthen oversight on public spending.
Currently, tax expenditures — the losses caused by various tax breaks — are estimated at 3.38% of the GDP. The Treasury wants to bring this figure down.
Rethinking Public Finance
In addition to taxes, the government is pushing Ministries, Departments, and Agencies to raise more money through services they provide. The goal is to make government less dependent on borrowing, especially as debt servicing takes a growing share of the budget.
The Tax Amendment Act, passed earlier this year, is expected to aid in this effort. It includes several incentives aimed at easing the tax burden for ordinary Kenyans — such as increased tax-free pension contributions and exemptions for post-retirement medical funds.
There’s also a tax amnesty programme, intended to help individuals and businesses clear outstanding dues without heavy penalties.
Cutting Costs, Raising Confidence
On the spending side, the government says it is introducing stricter controls.
Among the proposed reforms:
- An e-procurement system to reduce corruption and boost transparency.
- A new HR management system to curb ghost workers and manage wage bills.
- A renewed push for Public Private Partnerships (PPPs) in infrastructure and service delivery.
Experts say the approach is ambitious — but necessary.
“We have to stop spending more than we earn,” said Dr. Emily Mwaura, an economist based in Nairobi. “But this must be done fairly. It cannot just mean squeezing the same people harder.”
Some business leaders have raised concerns, arguing that frequent tax changes and high operational costs are hurting investment confidence.
“We need predictability,” said Peter Mbugua, chair of a manufacturing lobby group. “If the government wants to collect more, it also has to support businesses to grow.”
A Balancing Act Ahead
The KRA’s target — while bold — will be closely watched. Kenya has struggled in recent years to meet revenue goals, often turning to loans to plug gaps. But with pressure mounting over public debt and demands for better services growing louder, the agency has little room for error.
Whether these reforms can deliver remains to be seen. What’s clear is that KRA is no longer just collecting taxes — it’s carrying a good chunk of Kenya’s economic hopes on its back.
