Government’s increased revenue strategy faulted amid missed targets, public backlash

The PBO attributes these missed targets to deep-seated inefficiencies, citing poor implementation of tax policies, weak enforcement mechanisms, and widespread compliance issues.
The Parliamentary Budget Office (PBO) has cast doubt on the government’s recent efforts to enhance domestic revenue mobilisation, revealing a pattern of underperformance, policy inefficiencies and growing public dissatisfaction.
In its October Budget Watch report, the Office says the country has repeatedly missed its revenue targets over the past two financial years.
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This is despite an ambitious push through successive tax amendment laws, raising concerns about the effectiveness of the tax strategy.
Notably, according to the report, the government introduced sweeping fiscal reforms through the Finance Act, 2023 and the Tax Laws (Amendment) Act, 2024, aimed at expanding the tax base and boosting collection.
However, in FY 2023/24, the Finance Act’s target of raising Sh211 billion from new tax measures fell drastically short, with the overall revenue target missed by Sh205 billion.
“Similarly, in FY 2024/25, the Tax Laws (Amendment) Act, 2024 targeted a collection of Sh79 billion, but the annual revenue target for the year was missed by Sh137 billion,” the report reads.
The PBO attributes these missed targets to deep-seated inefficiencies, citing poor implementation of tax policies, weak enforcement mechanisms, and widespread compliance issues.
It also highlights that despite the introduction of new levies and measures, public dissatisfaction has grown, pointing to a disconnect between tax policy and public sentiment.
Crucially, the findings suggest that the government’s strategy, while aggressive on paper, has failed to generate the intended results due to structural and administrative weaknesses.
In light of the findings, PBO recommends a rethink of the current approach.
With FY 2025/26 on and running, the Office says the government faces mounting pressure to strike a delicate balance between generating revenue and restoring public trust, particularly through more inclusive tax policy design, better enforcement and streamlined administration.
In the current year, the government has proposed a less ambitious target of collecting Sh30 billion through the amendment of various tax measures through the Finance Act, 2025.
The Act marked a strategic shift from previous tax amendment laws since, instead of imposing new tax burdens, it focuses on strengthening revenue collection through administrative reforms and improved taxpayer compliance.
Key measures include simplifying tax laws to make them clearer and more accessible, as well as eliminating redundant provisions to create a more efficient and transparent tax system.
According to the Office, the shift offers the government a pivotal opportunity to realise its revenue target of Sh3.3 trillion for FY 2025/26; enhancing tax administration through more robust enforcement of existing laws, the integration of advanced data analytics, and the broader adoption of technology will greatly improve compliance and operational efficiency.
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