Formula For Sharing Revenue Among County Governments 28th February 2012

7/30/2019 Formula For Sharing Revenue Among County Governments 28th February 2012

1/20

RECOMMENDATIONS ON SHARING OF REVENUE RAISED BY THE NATIONAL

GOVERNMENT BETWEEN THE NATIONAL GOVERNMENT AND COUNTY

GOVERNMENTS AND AMONG COUNTY GOVERNMENTS

COMMISSION ON REVENUE ALLOCATION

COMMISSION ON REVENUE ALLOCATIONPromoting an equitable society


2/20

100%

> 15%

REVENUE

RAISED NATIONALLY100%

COUNTIES SHARE


< 84.5%

NATIONAL SHARE

0.5%

EQULIZATION FUND

FORMULA

SHARING AMONG 47 COUNTY GOVERNMENTS

1

SHARING OF REVENUE RAISED NATIONALLY


3/20


BASIS (FORMULA) OF DIVISION OF REVENUE RAISED NATIONALLY

PROCESS OF APPROVING THE FORMULA BY (SENATE,) NATIONAL ASSEMBLY

2


4/20


AUDITED YEAR 2010-2011 GOVERNMENT EXCHEQUER RECEIPTS

PARTICULARS 2010/11

SHS. MILLIONOpening balance 2,673Income Tax PAYE 137,054Income Tax Corporations 121,596

VAT Local Goods 90,211VAT Imported Goods 81,669Exercise Tax 80,566License under Traffic Act 2,463Customs Duties 46,071Other Taxes from International Trade 20,598

Stamp Duty 6,800Land Rent 1,073Other Profits & Dividends 9,085Profits & Dividends from CBK 2,000Interest Received 758Misc. Revenues 7,823Fines, Penalties & Fortitures & Other Charges 289SUB TOTAL SHAREABLE REVENUE 610,729Recurrent Recovery Over Issues 2008/09 2,457Development Recovery Over Issues 2008/09 815

Grants from Foreign Government through Exchequer 7,468Loans to Financial Institutions 33Loans from Foreign Government through Exchequer 17,016Loans to Non-Financial Public Enterprises 1,126Domestic lending T/Bills 4,000Domestic lending T/Bonds 186,300Civic Contingencies Fund Recoveries 1,075SUB TOTAL NOT SHAREABLE 220,290GRAND TOTAL 831,019

3


5/20


RECOMMENDATIONS ON SHARING REVENUE RAISED NATIONALLY BETWEEN THENATIONAL AND COUNTY GOVERNMENTS FOR FINANCIAL YEAR 2012-2013

SHAREABLE AUDITED REVENUE FOR 2010-2011 = SHS.610 BILLION

COUNTY

GOVERNMENT SHS.203

BILLION

33%

NATIONAL GOVERNMENT

SHS.407 BILLION

67%

4


6/20


5

PEER-TO-PEER LEARNING

THE COMMISSIONERS VISITED THE FINANCIAL AND FISCAL

FINANCECOMMISSION OF SOUTH AFRICA

UGANDA LOCAL GOVERNMENT FINANCE COMMISSIONWAS

INVITED IN APRIL 2011 FOR A KNOWLEDGE-SHARING FORUM

TWO COMMISSIONERS AND ONE STAFF MEMBER ATTENDED

AFISCAL DECENTRALISATION AND LOCAL GOVERNANCE

COURSE AT ANDREW YOUNG SCHOOL OF PUBLIC POLICY AT

GEORGIA STATE UNIVERSITY, USA

DESK RESEARCHWAS CONDUCTED ON THE EXPERIENCES IN

OTHER COUNTRIES INCLUDING NIGERIA, SOUTH AFRICA,

UGANDA,RWANDA,INDIA, INDONESIA, PHILIPPINES,

AUSTRALIA, CANADA, AND USA


7/20


6

PUBLIC PARTICIPATION

PROFESSIONAL GROUPS

FOCUS GROUP DISCUSSIONS

COUNTY PROFESSIONAL FORUMS

RELIGIOUS GROUPS


8/20

1. AS SIMPLE AS POSSIBLE ;

2. BASED ONAVAILABLE OFFICIAL DATA ;

3. HAS INCENTIVES FOR EFFICIENT FISCAL MANAGEMENT;

4. MINIMISE INEQUALITIESAMONG COUNTIES; AND

5. GIVES EFFECT TO THE PROVISIONS OF THE CONSTITUTION


7

ATTRIBUTES OF A GOOD REVENUE SHARING

FORMULA AMONG COUNTY GOVERNMENTS


9/20

1. POPULATION

2. POVERTY INDEX

3. LAND AREA

4. BASIC SHARE

5. FISCAL RESPONSIBILITY


8

PARAMETERS CHOSEN FOR SHARING AMONG

COUNTY GOVERNMENTS


10/20


9

POPULATION

USE OFFICIAL DATA FROM K.N.B.S

THE SELECTION IS BASED ON TWO FACTORS:-

COST OF SERVICES DEPEND ON POPULATIONSIZE

PROMOTION OF EQUITABLE SOCIETYON PER

CAPITA BASIS


11/20


10

POVERTY

USE OFFICIAL DATA FROM K.N.B.S

SELECTION OF POVERTY INDEX IS BASED

ON:-

POVERTY COMPONENT TREATS EVERY

POOR KENYAN EQUALLYIRRESPECTIVE

OF LOCATION


12/20


MAMA EKAI

11


13/20


12

BASIC EQUAL SHARE

EVERY COUNTY HAS FIXED EXPENSES

IRRESPECTIVE OF SIZE, POPULATIONAND POVERTY LEVELS


14/20


13

LAND SIZE

USE OFFICIAL DATAFROM K.N.B.S

COST OF SERVICE DELIVERYDEPENDS ON

THE SIZE OF A COUNTY

TO ENSURE EQUITY,PLACED MINIMUM

AND MAXIMUM CONTRIBUTION TO TOTAL

LAND MASS AT 1% AND 10% RESPECTIVELY

BINDING INTRODUCESAFFIRMATIVE

ACTION IN FAVOUR OF VERY SMALL

COUNTIES


15/20


14

FISCAL RESPONSIBILITY

BUILDS FINANCIAL PERFORMANCE

INCENTIVE MECHANISM THAT WILL

ENSURE THAT;

FISCAL MANAGEMENT

EXPLOITATION OF REVENUE POTENTIAL

INITIAL EQUAL WEIGHT SINCE THERE ARENO HISTORICAL FISCAL PERFORMANCE

EVALUATION MEASURES


16/20

EQUITABLE SHARE Ca= (Pi + PVi +Ai+BSi+ FRi)

WHERE

Ca = COUNTY REVENUE SHARE

P = COUNTYs SHARE OF POPULATION COMPONENT

PV = COUNTYs SHARE OF POVERTY COMPONENT

A = COUNTYs SHARE OF LAND AREA COMPONENT

BS = COUNTYS EQUAL SHARE COMPONENT

FR = COUNTYS SHARE OF FISCAL RESPONSIBILITY COMPONENT


15

COUNTY EQUITABLE SHARE FORMULA

47

1i


17/20


16

HOW ARE WEIGHTS ASSIGNED?

1. EXTENT TO WHICH A PARAMETER GIVES

EFFECT TO THE PROVISIONS OF THECONSTITUTION;

2. SIMULATIONS RUN SEVERAL SCENARIOS


18/20


17

SUMMARY

PARAMETER %

POPULATION 60

EQUAL SHARE 20

POVERTY 12

LAND AREA 6

FISCAL RESPONSIBILITY 2

TOTAL 100


19/20

Basic Equal

Share 20%

Population

60%

Poverty

12%

Area 6%

Fiscal

Responsibili

ty 2%

60%

Fiscal Responsibility

2%


18

PARAMETERS AND WEIGHTS IN THE HORIZONTALFORMULA


20/20


THANK YOU

Documents

Formula For Sharing Revenue Among County Governments 28th February 2012