Collections from non-tax revenue sources climbed nearly two-fold in the first quarter of the current financial year, on the back of President William Ruto’s directive to parastatal chiefs to surrender surplus cash amid the increased digitalisation of payments for government services.
The receipts hit a record Sh65.32 billion in the three-month period ended September, Treasury’s monthly exchequer disclosures show, a 183 percent jump over Sh23.08 billion a year earlier.
The record non-tax revenue inflows into the exchequer, the government’s main account, “reflects the performance of receipts arising from the provision of government services, surplus funds from SAGAs [Semi-autonomous Government Agencies] as well as dividend income”, according to a senior official at the Treasury.
The government has in recent years been moving services to the online portal- the e-Citizen, in a bid to improve efficiency and seal loopholes for corruption.
Treasury says about 16,000 government services have been on-boarded to the e-Citizen platform in a bid to streamline access to government services and official payments into a single pay bill.
Some of the key State departments and agencies that have moved most of their services to e-Citizen include the Immigration and Citizen Services Department, the Kenya Revenue Authority, the Business Registration Service, the National Safety and Transport Authority, the Kenya Wildlife Services, Kenya Ports Authority and Competition Authority of Kenya.
“The single payment bill has worked well, and the visibility of our transactions has improved,” Treasury Cabinet Secretary John Mbadi told lawmakers earlier in the month. “The platform has managed to stop leakages.”
The MPs have also piled pressure on State agencies to account for projected Sh400 billion ministerial appropriations-in-aid (A-i-A) for the current financial year ending June 2025.
Ministerial A-i-A are revenues collected by various government ministries, departments and agencies, when discharging services and spent at source after appropriation by lawmakers. Some A-i-A receipts are charges on services such as registration of persons like national IDs and passports, transportation permits like driving licences, land titling, and business registrations.
Others include a Road Maintenance Levy charged at Sh25 per litre of petrol and diesel, a Railway Development Levy at 1.5 percent of the value of imports, a Housing levy at 1.5 percent of gross personal earnings matched by employers, a Petroleum Development Levy, and University Fees.
Revenues such as royalties, investment income as well as fines and forfeitures go into non-tax revenue pot.
The legislators, however, reckon that agencies tasked with collecting the A-i-A “underestimate their targets during budget approval only to seek an upward review during supplementary estimates”, raising questions over prudent expenditure of the funds.
“By 31st December 2024, the National Treasury should submit to the National Assembly the legal instruments and mechanism for transmitting excess AIA collections to the exchequer for reallocation to the needy areas or for reducing fiscal deficit. Further, the committee recommends policy measures for containment of the proliferation of non-tax levies, fees and charges, including the requirement for the approval of the National Assembly in a variation of those levies, fees, and charges,” the Budget and Appropriations Committee wrote in the supplementary budget report after the Finance Bill 2024 collapsed.
“By 31st December 2024, the National Treasury is to submit to the National Assembly recommendations on the review of legal frameworks or laws governing SOEs [State-owned enterprises] to require the remission of excess funds to the exchequer for application to the needy areas or reduction of public debt.”
Dr Ruto in March directed commercial State corporations to wire up to 80 percent of net profit to the Treasury, an order that has been included in the contracts of chief executives as one of the performance indicators for this financial year ending June 2025.
parastatal
“The money that some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment, ”Dr Ruto told parastatal chiefs at State House on March 26.
The aggressive mop-up of excess cash in the parastatals is expected to partly ease liquidity woes the Treasury faces following the collapse of the tax bill in July, creating a budget hole estimated at Sh344.3 billion.
The surpluses are comparable to profits by the State-owned entities and represent the balance between their revenues and expenses after tax.
