The government has moved to enforce a deadline on passage of Finance Bills by the counties in a bid to plug a loophole that has seen the 47 devolved units miss out on revenues. This is through a State-backed amendment to the Public Finance Management Act that if adopted by Parliament will insert a new clause into the law, compelling the 47 county assemblies to pass Finance Bills by June 30 every year.
The deadline is meant to allow counties to collect levies and fees at the new rates set in their Finance Acts.
Currently, the county assemblies do not have a deadline on when to pass the Finance Bill, with some passing the Bill six months later. This denies them revenues given that they can’t backdate fees and levies in case of higher rates passed in the Finance Act.
For example, the 47 counties raised Sh37.81 billion in the year that ended June 2023, representing 65.9 per cent of the annual target of Sh57.37 billion in the period. Counties have since the start of devolution dismally failed in raising internal revenues due to delays in passing Finance Bills, corruption amongst revenue officers and failure to automate payment systems.
“The principal Act is amended by inserting the following new section immediately after section 131— The County Assembly shall consider and pass the County Finance Bill, with or without amendments, in time for it to be presented for assent by 30th June each year," reads the Bill proposed by Leader of Majority Kimani Ichung’wah. The new clause will require the County Executive Committee member for Finance to table the Finance Bill before the county assembly by April 30th, for debate and approval by the end of June 30th.
This marked yet another financial year where the units missed out on their internal revenue targets, amid continued over-reliance on the equitable share disbursed by the National Treasury. The National Treasury, Controller of Budget and Commission of Revenue Allocation have for years called out the counties over their lacklustre approach to raising of revenues.
Mr Ichung’wa’s amendment, if adopted by Parliament and Senate, will see the county governments play in the same space as the national government in terms of enforcing revenue-raising measures as passed in the Finance Act.
Currently, Parliament is required by law to pass the Finance Bill and have it signed into law by the President by June 30th every year, paving the way for enforcement of all revenue-raising measures including new taxes from July 1, when the financial year starts.
The Finance Bill is the legal instrument that anchors any new tax or increases in existing taxes for both the counties and national governments.
