The Commission on Revenue Allocation (CRA) has opposed plans to cut equitable share to counties by Sh20.12 billion, in the wake of the anticipated revenue shortfalls in the current financial year.
The CRA says the revenue shortfall should solely be borne by the national government, a proposal that is meant to protect counties already grappling with delays in getting billions of shillings for equitable share from the National Treasury.
The National Assembly and Treasury have through the Division of Revenue (Amendment) Bill, 2024 proposed to cut Sh20.12 billion from the Sh400.12 billion allocated to the 47 counties, in a bid to equally share the burden of the forgone taxes.
Rejection of the Finance Bill 2024 in June, following weeks of deadly anti-tax protests prompted the national government to cut its budget and absorb the Sh325.88 billion anticipated revenue shortfall. However, the Treasury further needs to cut the budget by Sh20 billion.
“If the actual revenue raised nationally in the financial year falls short of the expected revenue set out in the Schedule, the shortfall shall be borne by the national government,” CRA says in its proposal to amend the Division of Revenue (Amendment) Bill, 2024.
The Bill is currently in Parliament for debate with governors jittery on the adverse implications if the Sh20.12 billion budget cut is approved and passed into law. Chopping off the billions of shillings will hit the 47 devolved units given that they mainly rely on the equitable share of revenue for both recurrent and development expenditure.
Counties are already struggling to pay salaries for last month, bringing to the fore the adverse effect of the hitches in getting their equitable share of revenue.
Over-reliance on the equitable share from the National Treasury is mainly driven by the dismal own-source- revenue collection by the counties where they have perennially been missing targets.
The Treasury has not released Sh100 billion in equitable share to counties for the first quarter of the current financial year, blaming it on the lack of a legal framework to guide the release.
The legal hitches are mainly due to delays in passing the Division of Revenue Bill, 2024, and the Division of Revenue (Amendment) Bill, 2024 whose debate is yet to be concluded.
In the 2023/24 financial year, the National Treasury failed to release Sh30 billion to the counties, which was part of the Sh385.42 billion allocated to the devolved units as an equitable share.
