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Economy

Rotich warns State firms over failure to remit taxes, workers' deductions

Treasury secretary Henry Rotich. FILE PHOTO | NMG
Treasury secretary Henry Rotich. FILE PHOTO | NMG 

State corporations will have to remit taxes and other deductions direct from their financial accounts in the latest bid to have government agencies honour their obligations on time.

National Treasury Cabinet Secretary Henry Rotich Friday admitted before a gathering of parastatal chiefs to a “very big problem” in government agencies when it comes to remitting monies to the taxman, and warned those who will “routinely fail” to pay up may be shut down altogether.

“It is usually a high priority for any citizen to do that (pay taxes). If you are withholding taxes for any employees, you have to remit them and any other taxes that you are required to pay,” Mr Rotich said.

“You need to remit them first otherwise there is a very big problem in the institution itself.”

The National Treasury, he said, has now authorised the Kenya Revenue Authority to link its online tax remittance system, also known as i-Tax, with financial accounts managed by State corporations.

Track monies

The parastatals will also link these accounts to the Integrated Financial Management System (IFMIS) used within the government, in what the CS argued will help track their monies and give the taxman and other national funds their dues.

“We have made it a high priority now and we have even linked our i-Tax and IFMIS so that as soon as money lands on any agency, and if you have not complied, the money is deducted automatically at source,’ he explained.

Despite having many employees and regular financial support from the National Treasury, State corporations have had consistent run-ins with the KRA, the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF) over delayed remittances of deductions from staff.

Some financial institutions have also categorised these group of employees as risky as loan repayments are delayed.

Mr Rotich was addressing a gathering of State corporation chairmen, chief executives and other senior State agency officers at the Kenya School of Government where they were launching new courses targeting accounting officers in these institutions.

Complete merger

He promised to complete the merger of State corporations announced by President Kenyatta four years ago “as soon as the law, when Cabinet passes, and when it is passed in Parliament.”

Public Service Cabinet Secretary Sicily Kariuki, who launched the programmes, criticised the parastatal chiefs for their regular travels abroad even when such travels suited their juniors who are in the operational departments.

“We issued guidelines last year that unless training is not available locally, one should not travel abroad.

"What we are emphasising today is that let us not travel abroad because it requires more resources, unless it is very critical,” she said.

“The travel that we need to be focusing on is one that either gives us feedback on some of the agreements that we have signed either regionally or internationally, where there is value and where you cannot escape.”

The debate arose from the claim by Deputy Chief of Staff Nzioka Waita that as many as 50 parastatal chiefs have handed in travel applications to go abroad for training.

He argued CEOs of these agencies should have delegated these opportunities to juniors “because it is very late in the day for you to be going for training instead of focusing on succession plans and implement the policies.”

Hit back

The chiefs had earlier hit back at the government and accused ministries of “interfering” with their work by duplicating instructions.

Kenya National Examination Council Chairman George Magoha argued that the blurred line between Cabinet secretaries and Principal Secretaries has confused many of the state agency bosses.

“In order for us to deliver, we need a clear chain of command,” said the former University of Nairobi Vice-Chancellor who also accused the government of lacking a policy on whether to hire locals or foreigners for these jobs.

Former Planning Minister Henry Obwocha, who now chairs the Privatisation Commission, said there has been a gap in how the political pillar of the Vision 2030 is being implemented.

“The economic pillar, we are on course. We are doing well. The social pillar, we are doing well. Who is handling the political pillar in this country? Where is it placed and how are we going to implement it so that we do not get what we are getting in this country?” he posed.

“Unless we get that pillar correct, it is going to spoil every other thing we have achieved in this country.”

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