CRA Recommendation On The Criteria For Sharing Revenue Among Counties For Financial Years 2015 2018

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Publisher Commission on Revenue Allocation (CRA)
Year of Publication
Category Papers and Articles Policies and Guidelines
County Nairobi
Description The Kenyan devolved system of government consists of one national government and 47 county governments. The governments at the national and county levels are distinct and inter-dependent, (Article 6). Though Article 209 empowers both county and national governments to impose taxes and charges, Article 203(2) provides for equitable sharing of revenues raised nationally to county governments. The Commission prepared the first recommendation concerning the basis for equitable sharing of revenue among county governments in 2012. The formula was approved by the National Assembly in November 2012. This formula has been used for sharing revenue among county governments for financial year 2012/2013; 2013/2014 and 2014/2015.

This recommendation specifies the second basis for determining the sharing of revenues among county governments for financial years 2015/2016; 2016/2017 and 2017/2018. The choice of specific arrangements for a transfer system is guided by the ultimate objective of the transfer program. Transfers serve various purposes: closing the vertical fiscal imbalance, equalizing fiscal conditions, or promoting a specific policy objective. To the extent that the determination of the basis for revenue sharing aims to ensure that all county governments have the fiscal means to provide a comparable level of public services, it should include some indicators capturing the differences in the costs of county government services. The choice of and relative weight attached to each of the indicators depend on the specific range of functions assigned to county governments.

?However, it is yet to be determined what constitutes a comparable level of public services in the various counties based on acceptable levels of norms and standards. In the absence of this information, historical budget data on devolved services provides a good guide on how the cost of delivering services varied across county governments and in particular how these costs are responsive to variations in socio-economic characteristics of counties that need to be remedied. Partly, county government services are funded by locally raised revenues. Locally-raised revenues provide key information on existing disparities among county government services levels. To achieve equitable levels of services, the transfer formula should therefore take into account some indicators of revenue capacity in the revenue allocation formula.

Source: Commission on Revenue Allocation,
Tags Public Finance


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