Financing Developments in Kenya Public Sector

The Public Finance Management Act 2012 sets the rules for how government at national and county levels can raise and spend money. The Act provides for the effective management of public finances by the national and county governments; the oversight responsibility of Parliament and county assemblies; the different responsibilities of government entities and other bodies, and for connected purposes.

In addition, the new constitution includes specific and detailed provisions on public finance issues including guiding principles, modalities for the generation, sharing of revenues between national and county governments and reporting and accounting.

The following are financing developments in Public sector of Uganda

Government Revenue in Kenya

In Kenya, there two classes of revenue namely tax revenue and non tax revenue.

The high level summary of each are as follows:

  • Tax revenue
  • Non tax revenue

The government has the following sources of revenue

  • Taxes on income
  • Profits and gains
  • Tax on property
  • Tax from VAT
  • Taxes on international trade transactions

Non tax sources of government revenue

  • Social security contributions
  • Property income
  • Sale of goods and services
  • Fines, penalties and forfeitures
  • Repayment from domestic lending

Challenges in tax collection

  • The alleged corruption
  • Lack of accountability in public utilities and goods
  • Exemptions granted to tax payers
  • Business is largely informal
  • Lack of transparency in the usage of tax
  • Deliberate budget proposal aimed at politicking
  • There are inadequate capacity and technical skills
  • Political interferences
  • Inappropriate laws governing property rates and trading licenses.
  • Inadequate record keeping by the authorities
  • The weak tax-benefit linkages..
  • A challenge of tax assessment collection and administration
  • Poverty among the taxpayers
  • Poor motivation to tax authorities
  • Ignorance about the rights and obligations

Ways of enhancing tax collection in Kenya

  • Tax awareness programmes
  • Enhancing domestic revenue mobilization
  • Attracting investors in the country
  • Blocking the revenue leakage areas
  • Stimulating commercial production in the agricultural sector
  • Constant provision of tax information to citizens
  • Enhancing the players in the informal sector to join the formal sector
  • Enhancing transparency in the tax collection
  • Enhancing the legal frame work with an aim of reclassifying some of the operators in the informal sector to the formal sector enhancing the services delivery within KRU

Means of enhancement of government revenue in Kenya

  • Improved budgeting Process for local authorities
  • Improved activities of the Internal Audit Functions
  • Complying with Internal Control systems such as Financial Management Regulation and other documentations
  • Reliable Financial Reporting from the local levels
  • Improve administrative procedures in tax collection
  • Realistic Penalties and Enforcement Procedures
  • Institution of measures to expand revenue base and eliminate tax leakages by Kenya Revenue Authority