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Corruption among Kenya Revenue Authority's workers is undermining the institution's ability to meet its revenue targets.

Despite regular interdiction of workers involved in the vice, revenues are still not climbing up.

In the last 18 months alone, the taxman has sacked 162 employees over corruption.

More than half of the sacked workers were customs officers stationed at border posts, airports and Mombasa port.

Corruption still tops the list of impediments that hindered KRA from meeting its targets during the 2008/2009 financial year when it projected to raise Sh493 billion from taxes but fell short of the target by Sh12 billion.

Even though the tax body has vigorously denied that its staff were involved in an import tax evasion racket exposed recently by a local TV station, the institution admits that corruption remains a major headache.

"Corruption is existent in various institutions in Kenya and KRA is not an exception" said Mr Kennedy Onyonyi, KRA's senior deputy Commissioner for Marketing and communication

KRA opened the July-September quarter--its first for 2009/10 financial year with a below target performance.

It fell short of its Sh128 billion revenue target for July September by Sh4 billion.

If this trend continues, Treasury could find it hard financing its expanded budget and this might harm recurrent and development expenditures.

The failure to meet the first quarter target will put pressure on the performance of the subsequent two quarters and this will leave Treasury in a tighter corner to finance this year's Sh860 billion budget -- the largest budget ever in Kenya.

Even though KRA says corruption is not entirely to blame for its inability to meet targets in the past 12 months, figures from the taxman indicate that all the revenue generating departments other than the Domestic Taxes department did not meet targets in the first quarter of 2009/10 (July-September 2009).

Roads Transport department failed to turn in its Sh1 billion target and instead collected Sh600 million in taxes despite an increase in car imports and motor vehicles registered in Kenya in the past 12 months.

Customs Services department targeted to raise Sh52.1 billion in the July-September quarter but collected Sh44.9 billion.

This reflected a downturn in imports which analysts have attributed to the economic recession that has hit markets that Kenya import from.

KRA says it is moving quickly to seal revenue leaks including weeding out bad workers involved in corruption, tax fraud and theft if it is to realise its expanded 2009/2010 target.

KRA faces a tough climb to meet its targeted of Sh545 billion from tax payers during the financial year up from the Sh493 billion projected in the 2008/2009 financial year.

The high target for 2009/2010 is intended at helping finance the Sh860 billion budget announced by Finance Minister Mr Uhuru Kenyatta in June but analysts say that the operating economic environment in 2009 that was characterised by a rising inflation rate, depreciation of the Kenyan currency against major international units and the fluctuation of the NSE index may repeat itself in the 2010 to deny KRA the much needed revenue.

Mr Nikhil Hira, a tax partner at consultancy firm Deloitte says KRA is not likely to meet its targets for the second quarter of October to December as the operating environment has not changed much.

"The environment has not changed at all we are in a position where there is economic downturn in the country, if tax payers are making losses they may not turn in good taxes, 2010 is going to be a pretty tough year for KRA" says Mr Hira.

The continued tax evasion at the various ports of entry as exposed by the media will continue to mount roadblocks on KRA as it attempts to raise the tax collections.

KRA is facing a difficult time to find the right mix of staff that can seal all the revenue leaks to push up the taxman's dwindling collections.

Four years ago KRA developed an Integrity Action Plan jointly with the World Customs Organization and the Commonwealth Secretariat.

Under this plan, KRA developed an Integrity Testing programme undertaken jointly with the Kenya Anti-Corruption Commission to test the integrity of staff as they carry out their duties.

Through this programme, the taxman managed to nab 162 members implicated in theft, corruption, fraud and complicity in tax evasion.

"We are faced with numerous challenges, some of which touch on issues of integrity. KRA recognises that in an organisation of its size there are bound to be elements whose intentions may be contrary to the goals of the organisation" said KRA Commissioner General Michael Waweru in a statement.