MPs approve VAT and county cash Bills

dn Bunge 1604 tdS.2 px

The 11th Parliament in session: Parliament has cleared the way for the release of funds to devolved counties after it fast-tracked the passage of the County Allocation of Revenue Bill.. FILE

The Parliament has cleared the way for the release of funds to devolved counties after it fast-tracked the passage of the County Allocation of Revenue Bill.

The approval of the Bill gives the go-ahead for the Controller of Budget to the Treasury to the Sh210 billion allocated to the counties.

At the same time, the House has approved the controversial Value Added Tax Bill with minor amendments that reinstated basic food items and services back to the exempt or zero rated category.

The two Bills now await President Uhuru Kenyatta’s assent into law.

The Treasury intends to raise Sh10 billion through the VAT Act and simplify procedures for paying taxes.

The VAT Bill reduced the number of goods and services previously exempted or zero rated from over 400 to about 27.

Basic food items such as maize flour, maize (corn) seed, rice, wheat flour, ordinary bread, gluten bread and unleavened bread, infant milk and food preparations for infants, milk, exercise books and other printed books, sanitary towels and tampons, mosquito nets, newspapers, journals and periodicals will not attract the 16 per cent VAT.

Other goods and services that will not attract tax are medical equipment, medicine, medicaments, medical laboratory, consumables farm inputs including seeds, pesticides, animal feeds, jet fuel, kerosene and aviation spirit, deceased persons effects, lifesaving apparatus, passage baggage ships, and other marine vessels, rewards earned by sportsmen, capital equipment for generation of electricity and electric energy.

The County Allocation of Revenue Bill share revenue which is devolved to the 47 counties among the county governments on the basis determined by the Commission on Revenue Allocation (CRA) and as approved by the National Assembly. The Bill was sent to National Assembly last Thursday for input.

Under the Bill, Nairobi County will get the lion’s share of the resources-Sh9.9 billion, Turkana Sh7.9 billion, Kakamega Sh7.4 billion, Nakuru Sh6.9 billion, Mandera Sh6.8 billion, Kiambu Sh6.3 billion and Kitui and Kilifi Sh5.8 billion.

Those that will get the least allocation for the 2013/14 financial year include Lamu Sh1.5 billion, Isiolo Sh2.4 billion, Laikipia Sh2.7 billion, Samburu Sh2.8 billion and Taita Sh2.6 billion.

The allocations to counties comprise Sh190 billion being the total equitable share of revenue and Sh20 billion for conditional allocation making a total of Sh210 billion.

The amounts devolved were based on the last audited accounts for the financial year 2010/11. The audited financial accounts for the year 2011/12 have not been approved by Parliament.

The MPs fast tracked the process of approving the Bill after waiving the referral period to the Budget and Appropriation Committee and that of Finance Trade and Planning.

The MPs accused the Senate of deliberately sitting on the Bill in order to portray the Assembly, which has been locked in supremacy battles with the former as anti-devolution.

Parliament was set to go on a month recess last Thursday but MPs frustrated the passage of the controversial Value Added Tax Bill 2013 to demand payments of July Salaries, mileage allowances and the Sh5 million car grant.

A total of 206 new MPs had not been issued with the grant which totals Sh1.03 billion. The money, together with legislators' July salary was due to be released on Monday but the same had not been sent to their accounts by Tuesday evening.

The MPs were also set to go on recess after approving the VAT Bill. The County Allocation of Revenue Bill was passed without amendments even after the budget and Finance Committee had agreed to sponsor amendments to the Bill.

The House required a two thirds majority (233 MPs) to make amendments to the Bill that is exclusively the mandate of the Senate.

A bitter exchange that followed the enactment of the Division of Revenue Bill into law without the Senate input has strained relations between the two Houses.

“We urge the Senate which had this Bill from April to in future fast-track the Bills that require our input for scrutiny by the House,” said Suba MP John Mbadi.

Mr Mbadi also warned the Senate against making amendments to money Bills which are exclusively the preserve of the National Assembly.

He particularly took issue with an amendment to the Public Finance Management Act which will now require the National Treasury to disburse monies to county governments at the beginning of every month and in any event not later than 15 day from the commencement of the month for expenditure of the following month.

“This is illegal amendments. We must amend the Bill at a later stage to remove that offending clause. Because we can’t raise the threshold needed to make such changes today,” he said.

Mbalambala MP Abdikadir Aden warned that counties were starting on wrong footing and asked Mumo Matemu, the chairman of the Ethics and Anti-Corruption Commission to monitor governors' spending.

“I wish to sound the alarm that we stand to lose up to Sh60 billion through corruptions and unnecessary spending. This House, Kenyans and EACC must rise and oversight the expenditures,” he said.

[email protected]