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County allocation set to jump by Sh119bn if BBI report is adopted

President Uhuru Kenyatta reads the BBI report when he received it at State House, Nairobi, on November 26, 2019. PHOTO | PSCU  

County governments stand to get at least Sh119 billion more if a recommendation of the Building Bridges Initiatives (BBI) to raise allocations to the devolved units to more than a third of State revenues is adopted.

The BBI report, which was made public Wednesday by President Uhuru Kenyatta, proposes that counties should receive at least 35 percent of national revenue contained in the last audited government accounts compared to the current 15 percent.

The last audited accounts are for the year ended June 2016, which put State revenues at Sh1.237 trillion. This means that the 47 devolved units would share about Sh433 billion if Treasury bases the proposed BBI allocations on the last audited accounts, up from the current Sh316 billion.

Further, the BBI report is recommending the introduction of a flat tax rate for income above the living wage of Sh22,300.

Currently tax is staggered between Sh12,290 and Sh47,059 monthly pay with duty ranges of between 10 percent and 30 percent. “The flat tax would lower tax fraud, encourage compliance and cut down on corruption in the assessment of taxes,” said the report.

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The raised allocation would make counties one of the biggest beneficiaries of the planned shakeup of Kenya’s political and economic structure.

The BBI recommendations seek to ban public officers from doing business with government, offer seven-year tax holidays to start-ups and award whistleblowers five percent of recovered proceeds of corruption. “Technocrats will use a formula that focuses on ensuring services reach the actual settlements of people so that resources are not allocated on the basis of uninhabited land mass,” says the BBI report.

This will benefit the densely populated counties given that population will have the heaviest weighting in the formula used to determine what each devolved unit of government gets from the national government. Recently, published results of the latest national census indicated that Nairobi, Kiambu, Nakuru and Kajiado counties alone added 3.1 million people, accounting for a third of the population increase, reflecting the flow of people in search of jobs, housing and education to the big towns. The 2010 Constitution devolved a minimum of 15 percent of the budget to 47 new counties, also handing them responsibility for basic healthcare, early education, local roads, and other infrastructure.

This was meant to heal the skewed development of Kenya across regions.

But the county governments have struggled to fulfil their responsibilities and curb the regional inequalities partly because of corruption and partly because of a lack of funds.

The National Intelligence Service will also be used to audit the value chain in agriculture to nab cartels while recruitment of youth into the disciplined forces will be handled by private firms to minimise corruption.

The BBI report wants a change in the defamation law to empower media to report on corruption and fraud without being subjected to legal intimidation such as public officers applying for court gags.

“Amend the Defamation Act to deny all public officers a course of action where allegations are made against them, in their official capacity, regarding matters of ethics and corruption,” the report recommends.

The report has also proposed that the president should appoint a prime minister from the party with most lawmakers in Parliament.

Kenya’s government is led by the president, and the country does not have a prime minister after it abolished the position in 2013.

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