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Fall in Kenya's tax revenue hits county budgets

By Otiato Guguyu and Fredrick Obura | Published Wed, March 7th 2018 at 13:02, Updated March 7th 2018 at 14:03 GMT +3
Treasury Cabinet Secretary Henry Rotich at a past function (PHOTO: FILE)

NAIROBI, KENYA: The government is planning to lower county governments budget to Sh248 billion from Sh302 billion approved in June last year.

Cabinet Secretary Henry Rotich said the decision which will see the budgets slashed by Sh18 billion is informed by a fall in tax revenue last for the 2017/18 financial year.

Revenue shortfall for this year is expected to hit Sh83 billion which has prompted the national government to cut unnecessary expenditure. The national government will take a budget cut of over Sh60 billion.

"If you were to tell us to disburse 100 percent judiciary executive and parliament also want their full share and I can't get the revenues and you do not want me to touch borrowing, it's impossible. I mean something must give,” CS Rotich to said.

Treasury said counties should implement austerity in unproductive spend like travel, hospitality and advertising.

“They can also hold off some projects that could wait like building county assemblies,” he added.

Treasury had hoped the taxman would collect Sh1.499 trillion in the current fiscal year, which means that it will be difficult to bridge the gap for the remainder of the year.

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Tell-tale signs that KRA was struggling started to manifest in the first four months of the fiscal year when the taxman missed the target by Sh40 billion.

Revised downwards

KRA blamed this on a drastic fall in customs duty after the Government allowed the importation of duty-free sugar, maize and milk to cushion consumers against a sharp rise in inflation.

Treasury Cabinet Secretary Henry Rotich then revised KRA’s target downwards to Sh1.439 trillion and now the taxman has the daunting task of raising Sh783 billion by June.

When revenues fall short, the Government relies on grants and loans, with projections to spend Sh2.3 trillion.

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