KCSE ONLINE

Esoma Online Revision Resources

Public Revenue and Expenditure - History Form 4

Public Revenue and Expenditure

In this topic, we shall discuss sources of public Revenue at the National and County levels. We shall also discuss expenditure and management of Public Revenue. In addition, we shall also explore the functions of the commission on Revenue Allocation.


Objectives

By the end of the lesson, you should be able to:


1. Identify sources of National and County government's revenue.


Sources of Public Revenue

Sources of Public Revenue

Public Revenue refers to the money that the government receives from various sources eg. Taxes. This unit deals with the sources of revenue for both national and county governments.

Sources of revenue for National Government

Sources of revenue for National Government

There are various ways in which the government raises the revenue. These include:

• Taxes

i. Direct taxes: eg. P.A.Y.E., Income tax, Airport tax, Game Park, Museum Fees, entrance fees by tourists.

ii. Indirect taxes: eg. Value Added Tax (VAT), Excise duties, sales taxes, export tax, import tax or custom duties, traffic revenue taxes, investment revenue tax, loan interests, land rates, house rates.

• Loans from International Financial Institutions

• Grants from other foreign countries

• Sale of licenses

• Profits from parastatals

• Aviation revenue

• Sale of government bonds

• Revenue charged on government investment eg. Rent

• Forestry and mining exploitation

• Interests on loans from government institutions and parastatals eg. NBK

Sources of Revenue for County Governments

Sources of Revenue for County Governments

County government raises their revenue through the following;

• Grants from the national government

• Rates from plots and land

• Trade licenses fees

• Rents from their buildings

• Fines from law breakers

• Loans from financial institutions

• External grants from foreign countries

• Sale of county property eg. Cars, plots etc

• Donations from corporates and wealthy people

• Cess- taxes charged on cash crops eg. Tea and coffee

• Market fees

Prior Knowledge

Previously, we learnt about the sources of public revenue for both national and county governments. Some of them are;


1. Taxes


2. Loans


3. Profits from parastatals


4. Fines charged by courts


5. Sale of licenses

6. Rents from government buildings

7. Donations from business partners

Objectives

By the end of this lesson you should be able to:


1. Explain the expenditure of the National and County government revenue


Expenditure and Management of Public Revenue

In this lesson we will discuss the expenditure and Management of public revenue at the National and County Governments.

Recurrent Expenditure

This refers to funds used by the government to sustain and maintain the existing facilities and services. These include:


1. Repair and maintenance of building and roads


2. Purchase of drugs


3. Purchase of equipment


4. Purchase of stationary


5. Wages and salaries


Development Expenditure

This is the money set aside for development projects


1. Infrastructural development such as roads, air ports, bridges, harbours


2. Establishing essential facilities such as schools, colleges, dams, irrigation projects, etc


3. Providing social services like health and education


County Governments

The county government spends its revenue in various ways.


1. Constructing and maintaining nursery and primary schools


2. Maintaining the road network


3. Provision of health services by constructing and maintaining health centers and hospitals


4. Building and maintaining markets


5. Provision of water and sewerage services

6. Provision of security

Financial Management

Revenue raised nationally should be shared equitably among the national and county governments. Financial control for both levels of government should be managed through three accounts:


1. The consolidated fund made up of all the money raised or received by or on behalf of the national government


2. Equalization fund receives one half % total annual revenue to provide basic services in marginalized areas


3. Revenue accounts in different county governments receives all the money raised or received on behalf of the respective county governments.

The committee on revenue allocation should be consulted and recommendations considered before parliament passes any financial bills.

Every financial year the cabinet financial secretary submits to the national assembly estimates of the country.

A committee of national assembly discusses and reviews the estimates and makes recommendations to the assembly for approval

Appropriation bill is introduced in the national assembly to authorize money withdrawn from the consolidated fund (National Assembly can authorize withdrawal of up to 50% if the bill is late).

County governments prepare and adopt their own respective annual budgets and appropriation bills, but must conform to procedure prescribed in the acts of parliament

Accounts all government levels and other state organizations shall be audited by the auditor general.

Prior Knowledge

Previously, we discussed expenditure and management of public revenue. It is important that the government ensures that public revenue is managed well. That is why the Constitution of Kenya which was promulgated on 27th August 2010, created national institutions to assist the government in offering efficient services to the citizens. The Commission of Revenue Allocation is one of these institutions whose main responsibility is to give recommendations to the Ministry of Finance on how to allocate finances to national and the county governments.

Objectives

By the end of the lesson, you should be able to:


1. Discuss the functions of the Commission on Revenue allocation


The Commission on Revenue Allocation

In this lesson, we shall discuss the functions of the commission charged with the responsibility of managing the revenue allocation.

Kenyan Currency

Functions of the Revenue Commission

The functions of this commission include:


1. To decide the basis for the sharing of revenue raised by the national government.


2. To make recommendations on how finances should be managed by the county governments as required by the Kenyan Constitution.


3. To encourage fiscal responsibility and financial accountability among the national and county governments.


4. To determine, publish and regularly review a policy which sets the criteria for identifying the marginalized areas.


5. To submit the recommendations to the Senate, the National Assembly, the National Executive, County Assemblies and County Executives.

First Chairperson of the Commission on Revenue Allocation.

Order this CD Today to Experience the Full Multimedia State of the Art Technology!

For Best results INSTALL Adobe Flash Player Version 16 to play the interactive content in your computer. Test the Sample e-Content link below to find out if you have Adobe Flash in your computer.

Sample Coursework e-Content CD

Other Goodies for KCSE ONLINE Members!

Coursework e-Content CD covers all the topics for a particular class per year and costs 1200/- ( Per Subject per Class ).

Purchase Online and have the CD sent to your nearest Parcel Service. Pay the amount to Patrick 0721806317 by M-PESA then provide your address for delivery of the Parcel. Alternatively, you can use BUY GOODS TILL NUMBER 827208 Ask for clarification if you get stuck.

Install ADOBE Flash Player for Best Results

For Best results INSTALL Adobe Flash Player Version 16 to play the interactive content in your computer. Test the link below to find out if you have Adobe Flash in your computer.

Search

Subject Menu