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Is KRA using excise stamps to steal from taxpayers? ‘Weekly Review’ thinks so

By Kodi Barth

Where do public funds ordinarily get stolen? In government ministries, parastatals, or further down the gravy chain – for example, in government projects.

These are the places you would look if you smelled a rat in how government spends your money.

Yet, in a stunning twist, the Weekly Review, a pull-out in the Sunday Nation, wrote November 18 that a staggering Sh17 billion may be vanishing at the source, right where your tax shillings are collected.

In a story titled, “KRA’s Sh17bn poisoned chalice,” the story by Jaindi Kisero raised questions that suggest mischief with taxpayers’ money at Times Towers, the Kenya Revenue Authority’s home address.

Now the Weekly Review, refreshed in September by the Nation from the late Hillary Ngweno’s iconic masthead that folded 23 years ago, is not your quick and fast journalism. The magazine is written by veterans, in a manner that tells you that adults are in the room. Its hallmark is solid research on matters of public interest.

The author of this story, Kisero, is a veteran in financial writing. You can trust Kisero to smell a rat 10 miles away in any financial system.

That’s why when President Willian Ruto wondered loudly at a public function last month why Kenya sells far fewer excise stamps than its neighbours, Uganda and Tanzania, according to the story, Kisero developed an itch.

Excise stamps. You do know excise stamps, right? Those shiny, official-looking adhesives affixed on every bottle of juice, water, alcohol, cosmetics and tobacco products? They allow the tax authority to verify the authenticity of the product you’re buying and indicate to KRA that the required excise tax has been paid.

Turns out that Uganda sells the equivalent of Sh9 billion tax stamps annually, Tanzania Sh7.2 billion, and Kenya, with a much bigger manufacturing sector, sells a measly Sh2.9 billion worth of these stamps.

A week after President Ruto first said this out loud, the story said that he brought it up again in a meeting of the Kenya Manufacturers Association at a Nairobi hotel. This time, the President remarked that Kenya was selling more fake stamps than genuine stamps, the story said.

So, Kisero started following the little stamps. Who prints Kenya’s excise stamps? How much do Kenyans pay for these stamps?

Turns out that KRA in 2013 signed a controversial Sh17 billion contract with a Swiss conglomerate, Sicpa Solutions, to provide the stamps and associated technology to Kenya.

The story said that for 10 years this deal has cast a shadow not only on KRA but the Treasury, the Office of the President, the Public Procurement Appeals Tribunal, the Court of Appeal, and even Parliament.

Further, as President Uhuru Kenyatta’s administration was winding down, the story said that in May 2021 “the Swiss multinational successfully negotiated a sweet and new deal apparently locking out competitors and making it possible for Sicpa to continue securing multi-billion excise stamp printing contracts from KRA regardless of the regime in power.”

The story outlined four sticking issues:

One: KRA locked in only this Swiss company to exclusively provide excise stamp duty services to Kenya. No competition. Why?

Two: The deal stuck the country with a 10-year-old equipment and technology that is almost obsolete. Why?

Three: The deal set a floor price, but no ceiling for long-term cost of the excise stamps. In other words, the Swiss – and whoever else may benefit – got themselves a cash cow. Why?

Further, the story revealed that a technical committee at the Office of the President decided that all issuance of product authorisation and tax stamps in Kenya (by KRA, the Kenya Bureau of Standards, the Kenya Plant Health Inspectorate Service, and the Anti -Counterfeit Authority) should be run on a centralised platform under the KRA-owned and Sicpa-managed system.

Kudos, Weekly Review! You went where media doesn’t ordinarily think to look, found a stink that the people have a right to know, and smoked it out.

The story’s major gap was not telling readers what the average cost of the excise stamps service in other countries is. Because it’s hard to say a deal is expensive, which the story did, if the reader is given nothing with which to compare it.

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