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{
    "id": 553492,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/553492/?format=api",
    "text_counter": 46,
    "type": "other",
    "speaker_name": "",
    "speaker_title": "",
    "speaker": null,
    "content": "State corporations continue to get a huge allocation of taxpayers’ money, but their budget, unfortunately and tragically, is represented just as a one line item in the Budget books with no details provided. This is very sad when you think that we are giving about 3 per cent of the Gross Domestic Product (GDP) to State corporations and giving to the county governments 4 per cent of the GDP. These are not small numbers. In the 2015/2016 Budget, the budgetary allocation to State corporations account for as much as 32 per cent of the total Ministries, departments and agencies expenditure. Over the last two years, Parliament has been recommending that the budgetary transfers to those corporations be further broken down and that their budgets are submitted to Parliament. However, this has not been done, which limits our function in oversight. With respect to the Equalisation Fund, I wish to say the following:- That Fund has been allocated Kshs6 billion, as I indicated earlier, for the 2015/2016 Financial Year. However, the Budget and Appropriations Committee wishes to point out that Article 204(5) of the Constitution require that any unexpected money in the Equalisation Fund at the end of a particular financial year shall remain in that Fund. That Fund has been receiving budgetary allocations since the 2011/2012 Financial Year to date and cumulatively it should be in excess of Kshs10 billion. It is not clear whether that is the case. It is also important to note that the Fund has not been operationalised since inception due to lack of a framework. How is this Budget going to be financed? To finance this Budget, total revenue will contribute up to Kshs1.358 trillion thus financing 68 per cent of the total expenditure. Of this, Appropriations-in-Aid will account for up to 5 per cent of the total expenditure. The Government will also receive grants amounting to Kshs73.5 billion in the 2015/2016 Financial Year, which will cover up to 4 per cent of the total expenditure needs. Other revenue sources include concessional project loans amounting to Kshs283 billion, programme loans to support social safety nets amounting to Kshs8.123 billion and commercial financing of Kshs83 billion, which is a 10 per cent increase from this current Financial Year. Commercial financing is for financing projects with high expected risk-adjusted rate of return, including critical infrastructure that would otherwise not be undertaken due to lack of concessional finance. Net domestic borrowing will amount to Kshs219 billion. It is worth noting that Appropriations-in-Aid is a volatile revenue source often mired in weak reporting systems. Previously, the National Assembly has proposed that Appropriations-in- Aid be converted into revenues payable to the Exchequer as is the case with other taxes for appropriation to their respective uses. That is yet to be done given that Kshs103 billion will be treated as Appropriations-in-Aid in the 2015/2016 Financial Year. The resource is quite volatile with growth rates widely changing from a contraction of 1 per cent and so on. It is not a very happy picture. To remedy the challenges, the Budget and Appropriations Committee reiterates that measures be taken, particularly by the Treasury, to realign that function with other functions that bring in revenue, so that we can bring in the necessary yield and attain equity and fairness in the implementation of the Appropriations-in-Aid component. Though the financing proposals in the Budget appear to meet the expenditure needs, it is increasingly evident that spending measures are worsening the fiscal deficit and further fuelling increased reliance on some business unfriendly financing mechanisms such as licences, fees and charges. Owing to the narrow tax base for some tax classes, high effective tax rates at the individual and corporation level may negatively affect work effort. Changes should, therefore, be made to ease pending pressure that place heavy demands on the tax collector and the citizen and to reduce the myriad licencing fees and charges with the ultimate focus of growing our tax base."
}