New data from the National Treasury showed that the money the government generates from non-tax sources such as service charges, as well as absorbing surplus funds from parastatals, more than quadrupled in the first two months of the year.
The Treasury said in its monthly disclosures that non-tax revenue for July and August amounted to Sh17.63 billion, a 445.38 percent increase compared to Sh3.23 billion in the same period last year.
The highest non-tax revenues in the period under review came on the back of pressure from lawmakers for greater scrutiny of how Ministerial Allowances in Aid (AiA) are collected and spent by various state agencies amid increasing digitization of government services.
Ministerial revenues are revenues collected by various ministries, departments and agencies in providing services and are spent at the source after being allocated by the legislators.
“The committee noted with concern that the aid allocation includes a large component of national government funding of about Sh400 billion in the proposed budget for the 2024/25 financial year,” the Budget and Appropriations Committee wrote in its supplementary budget report in July after the collapse of the Finance Bill 2024.
“However, the agencies charged with collecting corporate income tax continued to underestimate corporate income tax targets during budget approval and then sought to revise these targets upward during supplementary estimates. This would continue to undermine the accountability and wisdom of corporate income tax, a form of revenue collected from taxpayers.”
Some of AiA’s receipts include a road maintenance levy of Sh25 per litre of petrol and diesel, a railway development levy of 1.5 per cent of the value of imports, a housing levy of 1.5 per cent of gross personal income which is matched by employers, a petroleum development levy and university fees.
Services such as transport permits, driving licenses, land registration and person registration are also major sources of non-tax revenue. Other sources are royalties, investment income, fines and confiscations.
President William Ruto has also insisted that state-owned entities must hand over dormant funds in their accounts to the Treasury. The president followed this up with a directive in March that state-owned businesses must transfer up to 80% of their net profits to the Treasury, which has now been included as one of the performance indicators for chief executives in the financial year ending June 2025.
“The money that some parastatals make does not belong to their boards or management. It belongs to the people of Kenya as returns on investment,” Dr Ruto told parastatal heads at State House in March. In recent years, the government has moved services to an e-citizen portal to improve efficiency and plug loopholes in corruption, bribery and other forms of corruption.
Key government departments and agencies that have moved most of their services to the e-Citizen programme include the Department of Immigration and Citizen Services, Kenya Revenue Authority, Business Registration Service, National Transport and Safety Authority, Kenya Competition Authority and Kenya Ports Authority.
Non-tax revenue sources generated Sh129.27 billion in the year ended June 2024, an increase of 57.65 percent compared to Sh82 billion in the previous year.