Are we supposed to borrow money so that MPs can be paid higher salaries?

Tuesday May 28 2013

 

By JAINDI KISERO [email protected]

I have looked at the Division of Revenue Bill 2013 and this is what I see. When you add up the money we want to channel to the 47 counties to fund their functions, you end up with a negative figure.

It means that what we collect as taxes is not going to be enough. This is the consequences of a State apparatuses that have expanded massively within a very short period.

The National Assembly is twice its former size. In addition, we have 47 new senators. And, the number of constitutional bodies has proliferated in an unprecedented manner.

County governments are busy hiring executive members and public boards.

Attitude and mindset is also a problem. We have an elite that views the public exchequer as a source of inexhaustible largesse. MPs want their salaries increased. County representatives also want big salaries.

The big question is this: Where on earth is the fiscal space to fund large infrastructure projects we have planned under Vision 2030 going to come from?

Yes, we can increase taxes. But with revenue mobilisation already at 20 per cent of the GDP, is the scope for introducing new taxes a realistic option?

Indeed, what we should be focusing on right now is how to collect taxes more efficiently and how to broaden the tax base further.

Nor is more domestic borrowing an option. Granted, our debt to GDP ratios have not reached those catastrophic levels we see in Western Europe.

But it does not make economic sense to increase borrowing just to spend the money on paying the salaries of MPs and County representatives?

Clearly, the only realistic option to us in the current circumstances is to create fiscal space by improving the efficiency of existing expenditure.

We have to cut unproductive general administration expenditure.

But who will be the prefect to instill fiscal discipline in both the national and country government?

In the past, this was the exclusive turf of the Treasury. But today, too many institutions have a say in the public financial management arena.

You have the Commissioner for Revenue Allocation, Controller of  Budget, the Transition Authority and the National Treasury.

The authority of the Treasury as the anchor of the public financial management system under the new dispensation is yet to sink in.

The other day, the Commissioner of Revenue Allocation engaged the National Treasury in a sterile disagreement over “shareable” revenues. Parliament and the Judiciary don’t want a prefect looking over their shoulders on money matters.

Under the Constitution, there is a limit to the number of people the governor can appoint to the county executive.

But where is the prefect to supervise and monitor the process of hiring members of county executives?

Whose responsibility is it to ensure that governors don’t collude with county assemblies and county public service boards to hire more people than is stipulated in the Constitution?

Right now, we are about to literally throw money and responsibilities to county governments without considering whether they have the capacity or wherewithal to absorb the money– account for it – and report on it regularly.

Initially, the plan was that money would be released to county government in phases – disbursed in tranches depending on the capacity of each county to manage and it.

The Transitional Authority was supposed to assess each county’s capacity to take up new responsibilities and decide when to transfer the money to each.

Apparently, this idea has been dropped. A situation where some governors in one part of the country were going to get their full share of the money while others are forced to wait for the nod from the Transitional Authority turned out to be politically unpalatable.

Consequently, we decided to throw all the money at the governors at one go and worry about capacity and accountability systems later.

If we don’t navigate this devolution thing well, it may end up disrupting government financial operations in major ways.