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Collections from the special levy stood at Sh14.6 billion in the nine months to March against the set target of Sh9.9 billion. Performance attributed to improved cargo shipment through Mombasa.
Collection from the Railway Development Levy (RDL) has surpassed its target despite the exemption of goods imported into Kenya from other East African Community states.

The Treasury, in its latest budget review for the third quarter ending March, says collections from the special levy stood at Sh14.6 billion in the nine months to March against the set target of Sh9.9 billion.

The Kenya Revenue Authority (KRA) had set a target to raise Sh13.5 billion from the RDL collections over the fiscal year 2013/14.

Traders attributed the performance to improved shipment of cargo through the port of Mombasa, which handled nine per cent more cargo in the first quarter of this year helped by an expansion programme that has improved efficiency.

The port handled 5.56 million tonnes in cargo between January and March this year compared with 5.10 million tonnes in the same period in 2013, statistics by the Kenya Ports Authority (KPA) showed.

The higher-than-expected RDL collections provide a major relief to the government after KRA was forced to suspend the 1.5 per cent levy on all imports to Kenya from Tanzania, Uganda, Rwanda and Burundi in March.

READ: Rail levy set for review after hitting Sh10 billion

Some critics had warned that the exemptions would affect collections from the RDL that was introduced to help raise funds for the construction of the new rail line from Mombasa to Nairobi.

The Treasury allocated Sh22 billion in the 2013/14 budget and introduced the RDL on “all imports for domestic use,” to raise additional cash for loan repayment.

The taxman was forced to review the RDL collections after regional traders filed a complaint with the EAC Council of Ministers citing breaches to the regional common market protocol.

A regional lobby group, the East African Business Council, argued that the 1.5 per cent levy imposed on imports was inconsistent with the EAC Customs Union Protocol, because it is a charge of equivalent effect that partner states agreed to remove.

East African traders move to block Kenya’s rail levy

The customs union protocol enables goods produced within the region to be sold across the borders without duty while imports from non-EAC states are subjected to a three-band common external tariff structure.

Raw materials attract no duty, intermediate goods are charged at 10 per cent while finished products are allowed into the region at 25 per cent tariff.

Kenyan traders further said the RDL, which KRA imposed on top of other levies such as the 2.5 per cent import declaration fee, was tilting the competition landscape in the shared market in favour of their neighbours.KRA gave in to the pressure in early March this year and ordered all its officers to stop imposing levy on goods entering Kenya from the other four member states of the EAC.

China on May 11 signed an agreement to fund Kenya’s railway modernisation project, paving way for constructing of the standard gauge railway just weeks after two parliamentary committees cleared the multi-billion-shilling project.

The deal handed China Road and Bridge Corporation the construction contract. President Uhuru Kenyatta and Chinese Prime Minister Li Keqiang witnessed the signing of the financing deal in Nairobi.