KRA to collect revenues for counties in new Public Finance Management Bill
Times Tower, the Kenya Revenue Authority's head office in Nairobi. A bill proposes that the KRA collect revenue for counties.
What you need to know:
- The proposed law is seeking to anchor in law county governments revenue systems.
- It also calls for collaboration between county treasuries and the KRA in designing, developing, and implementing revenue collection systems.
A proposed law is advocating for the involvement of the Kenya Revenue Authority (KRA) in the collection of revenue by county governments.
The Public Finance Management (Amendment) Bill, 2023, sponsored by nominated Senator Hamida Kibwana, calls for collaboration between county treasuries and the KRA in designing, developing, and implementing revenue collection systems.
“A county treasury shall, in consultation with the National Treasury and the Kenya Revenue Authority, design, develop and implement a county revenue collection system within one year of the coming into force of this Act,”the Bill states in part.
The Bill is also seeking to anchor in law county governments revenue systems.
Appearing before the Senate Standing Committee on Finance and Budget to submit views on the proposed law, Council of Governors (CoG) Finance Committee chairman Fernandes Barasa stressed the importance of respecting the sanctity of devolved governments while establishing the county revenue system.
The Kakamega governor also emphasised on the distinction between counties and the national government in law.
The proposal has elicited mixed reactions from the CoG and senators, particularly concerning the collaboration with KRA.
“Several counties have established their own revenue collection systems that ought to be recognised by law,”said a United Democratic Alliance senator who sought anonymity.
The Bill also proposes the preparation of quarterly statements and reports by county treasuries, highlighting the financial and non-financial performance of the revenue system.
The legislative proposal comes at a time when county governments are experiencing a decline in revenue collection, with many struggling to meet their targets.
A report by the Commission on Revenue Allocation (CRA) and the World Bank Group indicates that county governments have the potential to collect up to Sh216 billion annually from key streams, compared to the Sh31 billion they collect at present.
During the launch of the report, CRA chairperson Jane Kiringai said counties could raise substantial resources to supplement their annual budgets and urged them to automate revenue collection.
