Kenyan government now eyes counties funds to fund its development projects after running broke
Mr Rotich blamed the country’s financial situation on failure by the Kenya Revenue Authority (KRA) to hit its projected collection targets.
While appearing before the Senate committee on Finance and Budget Wednesday Treasury Cabinet Secretary Henry Rotich said that the government is broke and is facing difficulties financing some of its development projects and tabled the proposal likely to put the national government and county government on war path.
“We have discussed with the KRA on how to catch up by tightening the tax net on the domestic and customs revenue,” Mr Rotich told the committee chaired by Mandera Senator Mr Mohamed Mahamud.
“We need to discuss with you (Senators) and governors that the figure we put on the table is not feasible based on the challenges that I have explained.”
According to the CS, the shortfall in revenue collection as projected in March last year when the budget was read early last year to pave the way for the August 8 general elections, is because of the prolonged electioneering period and the ongoing biting drought.
The CS noted that these affected revenue collection as it slowed down business activity in the country.
Critics have however blamed the national government led by President Uhuru Kenyatta for the cash shortfall citing an expanded cabinet, corruption and wastage of public funds.
Auditor General latest report for instance exposed white elephant projects that gobbled up to Sh10 billion of taxpayers' money without the government taking any action.
As the cash crunch bites, the government is likely to resort quick fix solutions such as increasing taxes to source for funds and already the ministry of energy has indicated fuel prices will increase in the coming weeks.
In the current financial year, Sh302 billion was allocated to the 47 county governments in equitable share of revenue collected, meaning that in the worst case scenario, the allocation could slashed to Sh285 billion.
However, Senators Mutula Kilonzo Junior (Makueni) and Ms Rose Nyamunga (nominated) have opposed the move to slash counties' allocations saying it may affect ongoing projects in devolved units.
“Just tell us that the government is broke! Otherwise this thing you are telling us about reduction of the counties allocation is something that we can’t sell. It is impossible to do that midway through another budget making process,” Mr Kilonzo said.
Counties are also likely to incur unnecessary expenditures in compensation costs on the ongoing projects that are likely to be affected by proposed budget cuts.
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