• The Public Finance Management (Amendment) Bill, 2023 compels the devolved units to develop own revenue systems in collaboration with the Kenya Revenue Authority.
• In the submission made before Senate Finance committee considering the Bill, the governors said efforts are underway to establish an integrated county revenue management system.
Image: COG
Governors have rejected a Bill seeking to anchor in law county governments revenue systems in a bid to boost collections.
The Public Finance Management (Amendment) Bill, 2023 compels the devolved units to develop own revenue systems in collaboration with the Kenya Revenue Authority (KRA).
“The principal object of this Bill is to amend the Public Finance Management Act, No. 18 of 2012 to require county governments to develop and implement a county revenue collection system,” it states.
However, the county bosses have opposed the Bill, saying that already, several counties have established their own systems.
“We wish to note that a significant number of counties are already implementing revenue collection systems that ought to be recognised by the law as public resources have been used,” they said.
In the submission made before Senate Finance committee considering the Bill, the governors said efforts are underway to establish an integrated county revenue management system.
The system, they said, aims to standardise the revenue collection system in all the 47 counties.
“This was due to the presidential directive on February 7, 2019, that counties should have an ICRMS to eliminate unnecessary cost duplication by the counties as they procure different systems at different costs,” they said.
Following the directive, they said, a multi-agency team has been established and has since come up with a report pending implementation.
“The view of the council is ICRMS does not conform to the distinctiveness of the county governments as required by the Constitution of Kenya,” they added.
Currently, nearly all counties have contracted financial technology firms (Fintechs) to collect revenues on their behalf.
The counties spend millions to procure the systems besides the commission they charge for every coin they collect.
The new Bill sponsored by nominated Senator Hamida Kibwana introduces a new section to the Principal Act to provide for mandatory establishment of a revenue system.
“A county treasury shall, in consultation with the National Treasury and the Kenya Revenue Authority, design, develop and implement a county revenue collection system within one year of the coming into force of this Act,” it states.
The system, the Bill states shall be transparent, efficient, effective, verifiable, simple and adequately secure to prevent any fraud and losses.
The Bill shall respect and promote the distinctiveness of the national government and the county government and provide for separate accounting and reporting.
“A county treasury shall prepare and submit a quarterly statement and report on the performance of the county revenue collection,” it adds.
The county treasury shall submit copies of the quarterly statement and report to the Senate and the National Treasury.
In preparing a quarterly statement and report, the county treasury shall set out information on the financial and non-financial performance of the county revenue collection system.
Kibwana argued that development of own system will boost revenue collection by the county governments and ensure counties realise their revenue targets.
While the Bill provides that the county shall develop a system in collaboration with KRA, it stipulates that system shall respect the distinctiveness of the two levels of government, be secure, effective, efficient and transparent.
Further, the Bill proposes to amend the PFM Act to provide for the process of funding of functions that have been transferred from one level of government to another under Article 187 of the Constitution.