Kenya’s plan to split tax body proves tough

Monday May 14 2018

The Taveta-Holili one-stop border with Tanzania

The Taveta-Holili one-stop border with Tanzania on Kenya’s Coast. Porous borders have been blamed for the rising insecurity in the region.FILE PHOTO | NATION 

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Kenya’s plan to split its revenue authority to curb cross-border insecurity and smuggling of goods is facing challenges at home and in the region.

Five years ago, President Uhuru Kenyatta proposed a split of the Kenya Revenue Authority (KRA) into two agencies — the Domestic Revenue Agency and Customs and Border Control Agency.

But the East African Community partner states have opposed the plan, saying there is a need to jointly administer the borders without splitting their tax bodies. At home, the requisite legislation has not been passed by parliament.

Although the National Treasury Cabinet Secretary Henry Rotich in 2015 promised to push through parliament the two critical bills — Inland Revenue Agency Bill and Customs and Border Protection Agency Bill — to start the process of splitting KRA, government sources told The EastAfrican that the Bills have not been tabled due to opposition by the partner states.

“Everything we do, including Customs reforms must be harmonised with the EAC partner states’. We cannot do it alone. We are engaging member states and if they agree with our proposal, we will move ahead,” a senior government official told The EastAfrican.

Border security department

However, Kenya has already created a border security department at KRA to monitor the movement of cargo and people and prevent tax leakages and insecurity.

President Kenyatta proposed the split of KRA to partly deal with border security challenges, while conforming with the EAC protocols that facilitate free movement of goods and the establishment of a single Customs territory.

“The aim of the reforms is to make it responsive, efficient and effective in revenue collection, trade facilitation and securing our borders,” said President Kenyatta.

Porous borders have been blamed for the rising insecurity within the region while traders have had to contend with unfair competition from goods smuggled into the market.

It is understood that the International Monetary Fund (IMF) is also opposed to the idea of splitting revenue collection agencies, citing the lack of capacity by the countries to operate two revenue collection agencies. But IMF resident representative in Kenya Jan Mikkelsen declined to comment on the matter.
“I’m not in a position to offer any comments on this issue at the moment,” said Mr Mikkelsen.

Kenya’s National Treasury Cabinet Secretary Henry Rotich had not responded to our enquiries by the time of going to press.

The EAC member states Rwanda, Burundi, Kenya, Uganda, Tanzania and South Sudan are jointly implementing 15 one-stop border post (OSBPs) and joint border management systems.

The OSBPs facilitate faster movement of goods and persons by reducing the number of stops incurred in a cross-border transaction by combining activities of neighbouring countries at a single location.

According to TradeMark East Africa, the interventions are bearing fruit, with independent preliminary time and traffic surveys showing that 10 out of 13 operational OSBPs record 60 per cent reduction in crossing times, on average.

The Busia OSBP between Kenya and Uganda has seen Customs processing time reduced by 98 per cent on the Kenyan side, and by 69 per cent on the Ugandan side, according to TMEA.

Other OSBPs include Taveta/Holili, Mutukula/ Mutukula, Busia/Busia and Mirama Hills/Kagitumba.