Economy
New policy signals higher charges for public services
Monday February 19 2024
The government wants ministries to be self-sufficient, setting the stage for higher charges and fees on critical public services. PHOTO | SHUTTERSTOCK
The government wants ministries to be self-sufficient, setting the stage for higher charges on fees on critical public services.
In the 2024 Budget Policy Statement (BPS) released on Friday, the National Treasury has said that ministries, departments and agencies (MDAs) will be expected to collect enough revenues for their own expenses and even remain with more to remit to the Exchequer.
The new policy position has set off a wave of fee revisions by various State corporations pushing up the cost of several services including issuance of IDs, land transaction fees as well as service charges by the National Transport and Safety Authority.
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“The government will scale up efforts on requiring the various MDAs to not only mobilise more non-tax revenues but also transfer resources to the exchequer,” said National Treasury and Economic Planning Cabinet Secretary Njuguna Ndung’ u.
In the first six months of this fiscal year, the National Treasury received Sh224.6 billion in non-tax revenues, against a target of Sh177.7 billion as it continued to implement the single paybill collection system.
In the same period in 2022 non-tax revenue —known as ministerial appropriation-in-aid (A-I-A) and which includes fees and fines collected by State corporations— were Sh162 billion.
In the fiscal year 2023/24, the Treasury targets to collect Sh323.8 billion from fees and fines, boosting the exchequer’s coffers as it moves to bridge the budget deficit.
“The government is exploring non-tax revenue measures for the MDAs to wean off from exchequer revenue. The MDAs A-i-A should be able to fund the expenditures of the entities without relying on the exchequer revenue. The government will ensure that the proposed charges, levies and fees are reasonable without burdening Kenyans,” said Treasury in the BPS.
Increased collections of A-I-A helped compensate for the missed targets for tax collections as the economy continues on a rough patch characterised by a weak shilling and global shock.
In the first six months, collection of ordinary taxes fell below target by Sh186.2 billion and was helped by the additional Sh46.9 billion from non-tax revenues, reducing the deviation in total revenue to Sh139.3 billion.
Several agencies have moved to increase the fees and fines they charge as the State moves to supplement the tax collection in what is aimed at reducing Exchequer disbursement.
Some of the State agencies that have increased non-tax revenues include the Immigration Department which wants higher passport application and visa fees.
The increase in non-tax revenues captured the attention of President William Ruto who hailed the transparent and secure manner all revenues have been administered in his Jamhuri Day speech in December last year.
“We are, therefore, taking strong measures to ensure that all revenue is administered transparently, efficiently, and in a secure manner. One of our best interventions is the use of digital technology and the migration of government revenue collection to a single-pay bill,” said the President.
Also read: Nairobi collects more revenue than 30 counties combined
The government in August last year directed all MDAs to migrate to the single digital platform Paybill number 222222.
This week, the Cabinet approved the usage of e-Citizen in payment for school fees, a day after the High Court extended orders barring the government from compelling schools and other institutions of leaving to use the platform to pay fees and other levies.
