Senators want corrupt counties denied equitable share funds

Senators wants KRA to help counties collect funds

In Summary

• New Bill wants counties to account for own-source revenues collected.

• Kenya Revenue Authority will help the devolved units improve collections and enhance accountability.

The Senate in session. Photo/FILE
The Senate in session. Photo/FILE

Counties that do not account for their local revenues will not receive their equitable share from the National Treasury if a proposed law is enacted.

The Public Finance Management (Amendment) Bill, 2019 also wants counties to start collecting revenue jointly with the Kenya Revenue Authority.

The Bill which is currently in the first reading in the Senate is intended at boosting revenue collection by county governments and ensure accountability.

“The principal object of the Bill is to amend the PFM Act No. 18 of 2012 to establish a collaborative framework for the collection of revenues by the county governments and the National Treasury with the Kenya Revenue Authority,” said nominated Senator Agnes Zani, who is the sponsor of the Bill.

The Bill amends the Act by introducing new sections to compel county governments to develop and roll out revenue collection systems.

“Every county Treasury, in consultation with the Kenya Revenue Authority, design, develops and implement a county revenue collection system,” reads the Bill.

 The county treasuries shall submit bi-annual and annual reports to the county assemblies, the Senate, the National Treasury and the Commission on Revenue Allocation on the status of revenue collection and performance.

However, the Bill states that counties that fail to operationalise the collection system or prepare and submit annual reports will be denied funds.

 “The National Treasury may, pursuant to Article 225 (3) of the Constitution, stop the transfer of a county’s share of revenue raised by the national government if the county treasury fails.

The proposals come at a time when the county governments are struggling to meet their revenue targets.

According to a report by the Controller of Budget on the County Governments Budget Implementation Review for nine months of the 2018-19 financial year, nearly all the counties failed to meet their targets and are heavily relying on the shared revenue from the Treasury.

Some have not automated revenue collections leading to massive losses.

According to the report, West Pokot county share reduced by 76 per cent between the 2013-14 and 2017-18 financial years, the largest among the counties.

It was followed by Nyamira (56 per cent), Busia (47 per cent), Marsabit (40 per cent) and Kericho (35 per cent).

It shows that counties will have to innovate ways of generating more own-source revenue if they are to avoid over-reliance on Treasury disbursements.

Further, most of the devolved units have been spending the money they collect at the source instead of depositing the money to Revenue Fund Accounts to enhance accountability as required in law.

(edited by O. Owino)