By Tajeu Shadrack Nkapapa
The National Assembly has introduced the Division of Revenue (Amendment) Bill, 2024 that is going to oversee Revenue Sharing Adjustments in Response to Financial Shortfall.
H.E. the President assented to the Division of Revenue Act, 2024 on 10th June 2024.
The principal object of this Bill is to provide for equitable sharing of the revised sharable revenue raised nationally by the national government among the national and county governments.
After the Finance Bill 2024 was rejected by the majority of Kenyans and President Ruto failed to assent the Bill into law, the projected revenues raised nationally for the financial year 2024/25 have dropped significantly by KSh. 346.00 billion, from the initial projected revenue of KSh. 2,948.12 billion to revised projected revenue of KSh. 2,602.12 billion.
The National government’s share of revenue raised nationally has been adjusted downward by KSh. 325.88 billion.
The shortfall in the share of national government revenue has been partly covered by adjustment of budgetary allocations to the Executive, the Legislature, the Judiciary and constitutional commissions in the financial year 2024/25.
In order to facilitate bridging the above financing gap as well as facilitate the National government to provide resources towards critical areas, the Division of Revenue (Amendment) Bill 2024 proposes that the county government’s equitable share for FY 2024/25 be reduced by Ksh. 20.12 billion.
This translates to 5.81% of the projected shortfall in total shareable revenue.
On the Kenya Gazette Supplement issued by the National Assembly Bills 2024, under the memorandum of objects and reasons, Clause 3 of the Bill amends section 5(1) of the Division of Revenue Act, 2024 to provide for sharing of the shortfall in revenue raised nationally between the national and county governments equitably.
“The clause also provides for capping of the proportion of revenue shortfall to be borne by county governments which shall not be more than 15% of the shortfall to ensure stable and predictable allocation of revenue in line with Article 203 of the Constitution,” National Assembly wrote on X.
“Clause 4 of the Bill deletes the Schedule to the Division of the Revenue Act on allocations of revenues raised nationally between the national government and county government and replaces it with a new Schedule which reduces the equitable share county governments from KSh. 400.12 billion to KSh. 380.00 billion; and reduces the equitable share to the National Government from KSh. 2,540.15 billion to KSh. 2,214.27 billion,” the National Assembly added.
According to Parliament the revised allocation of KSh. 380.00 billion to county governments translates to 24.20% of the last audited and approved revenues of government for the financial year 2020/21, which is above the Constitutional threshold of 15%.