Treasury collects Sh5bn railway tax in three months Treasury collected Sh5 billion from the railway levy only three months after its introduction, surpassing the government’s quarterly target by 61.3 per cent. The taxman had targeted to collect Sh3.1 billion from the 1.5 per cent levy charged on all imported goods in the months between June and September to finance construction of a new high-speed rail and upgrading of existing lines. The surplus revenue from the railway levy helped the Kenya Revenue Authority bridge the deficit gap to leave it Sh11.1 billion short of its quarterly target. “Ordinary revenue inclusive of Railway Development levy collection amounted to Sh206.3 billion against a target of Sh217.4 billion, resulting in an under performance of Sh11.1 billion,” read part of the quarterly budget review released by the Treasury on Thursday. The annual target from the new railway tax, which was introduced in this year’s budget, is Sh13.5 billion. The rail levy will be added to the Sh22 billion that Treasury has set aside for construction of a new standard gauge rail track from Mombasa to Malaba. It is expected to raise transportation speed from Mombasa to neighbouring countries. Construction of the rail is expected to begin next month, with a ground-breaking ceremony scheduled for next week. The surplus collections are also attributable to increased efficiency at the Mombasa port. President Uhuru Kenyatta in June ordered the Commissioner of Customs to relocate to Mombasa and directed the clearing process at the port to be automated. He also directed that all authorised clearing and forwarding service companies and commercial banks in the clearing area to operate for 24 hours a day or have their licences cancelled. The government aims to complete the project that is estimated to reduce the cost of freight from Mombasa to Kisumu by as much as 79 per cent in three years. Last year, trains hauled about 1.62 million metric tonnes of cargo while the Mombasa port handled 21.9 million metric tonnes. The rest of the freight was handled by trucks, which are expensive and have been blamed for the destruction of roads. The collection indicates that the country could have imported goods valued at about Sh330 billion in the three months. The increased imports, however, saw the country’s balance of trade deficit deteriorate by 6.6 per cent to Sh374 billion, being 10.8 per cent of the GDP from Sh348 billion in September last year. “This was largely attributed to the widening of the merchandise account by $351 million or 3.4 per cent to $10,618 million in the year to August 2013,” said the Treasury. A deterioration of the balance of trade is a bad signal to a country’s economy as it indicates a possible depreciation of its currency as importers push up the demand of other currencies to make the purchases. Inflows from tourism and financial sector dropped during the period leading to a further reduction in the total deficit which is reflected in the balance of payment. Treasury data is, however, in contrast with Central Bank which reported that the country’s current account deficit was improving. “The current account deficit shows that the 12-month cumulative deficit (as percentage of GDP) improved from 10.45 per cent in December 2012 to an estimated level of 7.5 per cent by September 2013. This is within the internationally accepted range of sustainable current account deficits” said the CBK in an early this month. Central Bank has in the past warned of the ever-widening deficit, causing challenges to currency stability. nation.co.ke
Posted on: Sun, 24 Nov 2013 06:51:08 +0000
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