NAIROBI, Kenya, Jun 15 – The government has been urged to step up collection of fees levied by local authorities and other government departments as one way of raising funds to finance its expenditure.
Parliament’s Budget Committee Chairman Elias Mbau said the government charges billions of shillings from these services but half of it does not get to the national kitty and instead ends up in the pockets of rogue civil servants.
He argued that if the government was able to put in place proper structures to aid in the collections of these revenues, then it would not need to raise other taxes that are a burden to the average Kenyan.
“That money is usually a lot and if only we can ensure collection reaches the exchequer, we would not increase VAT (Value Added Tax), PAYE (Pay As You Earn) or other taxes and we would be able to balance our budget,” he said.
According to the chairman, who’s also the Member of Parliament for Maragwa, Treasury intends to raise eight percent of the 2010/2011 budget from this class of taxes thus the need to ensure efficiency in their collection.
His remarks came even after concerns of how the government intends to finance the one trillion shillings budget continue to generate debate. Out of the Sh996.8 billion budget, the government plans to collect a massive Sh688.5 billion in ordinary revenue, which Finance Committee’s chairman Chris Okemo dismissed as having little impact in the development of the country. He termed it as ‘discretionary’ since it was going to pay for ‘certain earmarked items.’
“In terms of revenue collection, we have made assumptions based on an assumed growth rate of 5.1 percent. If that assumption does not hold and we end up with a lower growth, then that has a direct impact on the revenue we are going to collect from taxation,” he added.
If this happens, this would force the government to borrow from the domestic market which could destabilise the macro economic environment.
The fact that the government’s ability to raise the finances is hinged on the good performance of the local economy and the recovery of the global one, Mr Okemo said calls for careful consideration of the issues at hand and a need to ensure a conducive environment for the private sector to operate it.
“Therefore the role of government will be to create an enabling environment for the private sector to perform and thrive because that will be the source of taxable income,” he said.
The two spoke during a briefing of the Budget Committee on the budgetary process where the MPs expressed concern with the country’s debt levels.
They said the Finance Minister Uhuru Kenyatta needs to devise new terms of borrowing to ensure that the private sector is not clouded out should the government decide to source for funds locally.
Currently, Kenya’s total public debt stands at Sh1.19 trillion with domestic debt accounting for Sh582.7billion. Despite the rise in this portfolio, the government has sought assured that the Kenya’s debts are sustainable and it does not foresee the country going the Greece way.