Debts and salaries gobble up tax revenue as counties starve
SEE ALSO :County splashes Sh4.3m on golden maceThe Government continued with its austerity measures that it started in the previous financial year, freezing all new development spending and capping recurrent expenditure. All State corporations and agencies will only be able to spend Sh286 billion by end of September after the Cabinet directed them to spend an equivalent of one quarter of last year’s approved recurrent spending for the three months. The approved recurrent spending for FY2018/19 was Sh1.14 trillion. “This amount should support all priority expenses over the first quarter ending September 30, 2019. Further, a moratorium is hereby issued placing in abeyance all capital expenditures until otherwise directed,” said Head of Public Service Joseph Kinyua. “During the moratorium period, no capital expenditure is to be undertaken unless the particular expenditure item is an ongoing project and is specifically approved in writing by the National Treasury.”
SEE ALSO :Pay lecturers their dues promptlyThe July spending by Treasury came as the standoff between the Senate and the National Assembly over the amount of money the devolved units are supposed to receive from collected taxes threatens to cripple counties. Treasury’s efforts to collect cash held by various State agencies seems to have yielded only Sh300 million. KRA’s performance in July was an improvement compared to the same period last year when the taxman collected Sh98.9 billion. The authority has been given a target of Sh1.8 trillion for the current financial year. Total revenue collection in FY2018/19, including monies such as agency fees, hit a new high of Sh1.58 trillion compared to Sh1.43 trillion collected in the previous financial year.
SEE ALSO :How to negotiate your salaryHowever, the taxes mobilised during this period were not enough to fund an expanded budget, forcing Treasury to borrow Sh770 billion during this period against an initial target of Sh635.5 billion, or 6.3 per cent of the GDP. Increased wages and interest on loans played a large part in forcing the country back into the debt market.
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