New twist in revenue sharing plan

By FRANKLINE SUNDAY

Kenya: Taxpayers might have to do with less services and development projects from the central government if the latest proposal to the Division of Revenue Bill 2013 is passed.

In the new revenue sharing model between the county and central governments, the Senate is proposing to raise its appropriations from the central government from Sh210 billion to Sh238 billion. This presents a challenge to the central government which is already struggling to plug a Sh300 billion deficit with alternative sources of revenue dwindling.

Justifying the proposed increase in allocation to Senate, chairman of the Senate Finance, Commerce and Economic Affairs committee Billow Kerrow said the Sh198 billion earlier allocated by Parliament would have crippled operations in many counties. “Most of the counties are having longstanding debts and heavy recurrent expenditures and this money would not have been enough.”

Kerrow adds that there were at least 18 counties which would have been crippled and unable to carry out the most basic of functions in the previous model. Virtually, all of the 47 counties have inherited large debts which were held by town and municipal councils spanning decades and with billions of shillings in accrued interest.

Most of the local authorities were unable to pay salaries using own revenues, with only 44 out of the 175 said to be able to sustain their wage bill.

Salary arrears held by local authorities are said to be in the excess of Sh1 billion with additional statutory debts owed to the NHIF, NSSF, Pension Funds and KRA.