The legislators said the version of the bill signed into law by the President was not the one agreed upon by the two Houses (Senate and National Assembly) during the mediation process.
Treasury says it has already disbursed over Sh50 billion to devolved units for July and August
Counties will now share Sh378.1 billion after President Uhuru Kenyatta finally assented to the controversial Division of Revenue Bill 2019, ending a three-month feud between the two levels of government.
But the Senate has rejected the version of the bill signed into law by the President, accusing him of clawing back the democratic gains made since the promulgation of the Constitution.
From Sh378.1 billion, Sh316.5 (or 84 per cent) is the equitable share of revenue raised nationally, while Sh61.6 billion (or 16 per cent) is conditional allocations to counties.
This is at least Sh18.5 billion less than the Sh335 billion in equitable share that the devolved units were initially demanding. The signing of the bill now paves the way for the release of funds to the counties. President Kenyatta asked the devolved units counties to prioritise settlement of pending bills, which have hurt suppliers and contractors and ended businesses for others. By February, counties owed Sh100 billion in pending bills, out of which Sh40.5 billion was found to be eligible for immediate payment.
A quarter of these arrears comprised unremitted taxes and other statutory deductions, whose delay, according to the National Treasury, constitutes an illegality. Other pending bills relate to outstanding payments to the Kenya Medical Supplies Agency for delivery of drugs and related commodities.
The rest of the arrears comprise dues to contractors and suppliers of goods and services, including utilities such as electricity and water.
With the new law in place, the President reiterated the government’s commitment to scheduled disbursement of funds to enable counties to continue delivering services to Kenyans.
The National Treasury said it had already disbursed over Sh50 billion to counties for the months of July and August. Treasury said the extended delay in the approval of the law had adversely affected the implementation of counties’ 2019/20 financial year budgets, with consequences on socio-economic activities as well as the delivery of crucial public services countrywide.
“While the vertical division of revenue is by design a political process, there is clearly urgent need for concerted effort by all actors to avert a similar stalemate in the future,” Acting Treasury CS Ukur Yatani said yesterday.
This comes even as senators warned that the President’s action was a threat to devolution, saying it would kill devolution as was the case in 1966.
“The Executive is taking us back to the days of dictatorship,” Narok Senator Ledama ole Kina said. The legislators said the version of the bill signed into law by the President was not the one agreed upon by the two Houses (Senate and National Assembly) during the mediation process.
The bone of contention between the two Houses is the commencement date of the Revenue Act. While the Senate had in its version said the effective date of the bill should be immediately after the presidential assent, the National Assembly amended it and backdated the implementation date to July 1.
“When you normalise one illegality, that is the beginning of impunity,” Minority Leader James Orengo said.
“The National Assembly is drunk with its own wine but as the Senate, we should not take their route. But let them know this is not the last time they are hearing of this matter,” he said
Mandera Senator Mohamed Muhamud told the President to respect the law, saying his action is contrary to the spirit of the Constitution.
Makueni Senator Mutula Kilonzo Junior said the President was playing dirty games. Nominated Senator Isaac Mwaura challenged the Senate to rise to the occasion and defend the Constitution, warning it had allowed the executive to “sit on Parliament”.