Law on sharing of revenue sparks off fresh debate

Politics and policy

Isaac Ruto, the chairman of the Council of governors. PHOTO | FILE 

By ALLAN ODHIAMBO, aodhiambo@ke.nationmedia.com

In Summary

• A dispatch from State House late Wednesday said county governments would receive Sh226.7 billion in the present 2014/15 year, an equivalent of “43 per cent of the national revenue”.
• President Kenyatta’s move was, however, met with apprehension in some quarters because the allocation ratio to counties is only true if applied as per the 2009/10 national revenue.

President Uhuru Kenyatta has signed the Division of Revenue Bill into law, triggering fresh debate on the financial year used to determine the sharing of funds between the national and county governments.

 

A dispatch from State House late Wednesday said county governments would receive Sh226.7 billion in the present 2014/15 year, an equivalent of “43 per cent of the national revenue”.

“The new law also allocates Sh799.65 billion to the national government of which Sh1.45 billion will go to conditional allocation for Economic Stimulus Package, Sh1.87 billion for Level Five hospitals countrywide and Sh3.4 billion for the Equalisation Fund, “the statement further said.

President Kenyatta’s move was, however, met with apprehension in some quarters because the allocation ratio to counties is only true if applied as per the 2009/10 national revenue.

“The government should come clean. They are allocating funds to the national government on the basis of the current budget and the counties on the past,” said Isaac Ruto, the chairman of the Council of governors.

According to article 203(2) of the Constitution, counties are entitled to at least 15 per cent of the revenue raised nationally and calculated on the basis of the most recent audited accounts of revenue received as approved by the National Assembly.

READ: Senate wants revenue allocation to counties raised to 40pc

The law is, however, soft on the national government’s finances because it is allowed to spend money each year as it collects.

Critics said the variation in the base year used to determine the revenue allocation ratio provided a window for “mischief”.

The Parliamentary Public Accounts Committee was in April put on the spot over its failure to approve latest revenue accounts which has limited revenue going to counties.

The committee was put to task following a proposal by the Treasury that counties be allocated Sh226 billion in the 2014/15 financial year—an equivalent of 43 per cent of the national revenue if based on the 2009/10 audited figures.

Besides Parliament, revenue allocation to counties has recently put the Treasury at loggerheads with the Commission on Revenue Allocation (CRA).

The commission had proposed that counties be allocated Sh279.1bn in 2014/15, about 40 per cent of the most recent audited revenue amounting to Sh682.1bn that Parliament approved for financial year 2011/12.