Why the CRA cut hit Counties hard as they are pushed to improve their Revenue Collection

Fiscal consolidation, a policy aimed at reducing budget deficits and debt accumulation, has been adopted by the Treasury as queries arise over the weight of public loans. CRA chair Jane Kiringai said the commission is concerned about the systematic reduction of revenue due to counties under the equitable share, arguing that while they support fiscal consolidation as a policy it should not be done at the expense of devolution.

“As a commission, we are concerned about the systematic reduction of equitable shareable revenue due to counties and it is our firm belief that the Senate must stand up and be counted if devolution has to succeed,” Dr Kiringai said when she addressed a meeting of the Senate leadership over the weekend. In the Division of Revenue Bill, 2019, tabled in the two Houses of Parliament last week, counties have borne the brunt of the Treasury’s cut of their share by Sh9.04 billion due to what CS Henry Rotich linked to low revenue collection.

“The proposed downward adjustment of county governments’ equitable share for the financial year 2018/19 is informed by the shortfalls in the national government’s revenue raised nationally since the financial year 2015/16,” Mr Rotich explains in the memorandum of objects in the Bill. He says the cumulative shortfall now exceeds Sh374 billion, adding that the revenue forecasting base for FY 2018/19 was overstated by Sh136 billion.