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Governor moots plan to reduce wage bill : The Standard

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Laikipia Governor Ndiritu Muriithi when he appeared before the Senate County Public Accounts and Investment Committee at Parliament. [Boniface Okendo/Standard]

Laikipia Governor Ndiritu Muriithi has hinted at reducing the county workforce to cut the high wage bill that currently stands at Sh2.7 billion.

Mr Muriithi said salaries represent more than 55 per cent of the budget. Which is higher than the development allocation which stands at Sh1.2 billion in this financial year’s budget.
“The issue of wage bill is critical and it’s of national concern. We are looking at a situation where belt-tightening measures will be needed so as to put the wage bill under control,” said Muriithi.
The Public Finance Management Act requires that personal emoluments should not be more than 35 per cent of the total budget.

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However, Mr Murithi did not reveal how many employees would be affected adding that he would be communicating on how they intend to scale down the jobs soon.
In his plan to streamline the public service, Muriithi said he intends to have fewer employees tasked with more duties.
“Why should we have street cleaners, parking attendants and revenue collectors at the same location? We should be able to live within our means and do more with less people,” Murithi said.
Paying personnel on study leave, he said, has also contributed to the ever rising wage bill.
“There are certain luxuries that we have enjoyed in the past that we may not enjoy in the future,” Murithi said.
Murithi also said employees retiring in a few months can be allowed to go much earlier.
“We will consider our human resource management to see how we can have an austere budget,” said the governor adding that the county will have nearly 489 employees retiring in the next three years.  

Laikipia Governor Ndiritu Muriithiwage bill



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Treasury Releases Funds to Counties Showing Acceptable Plans to Clear Pending Bills

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A statement from the National Treasury shows that 18 counties that showed acceptable plans to clear pending bills received reimbursements for November.

Acting Treasury CS, Ukur Yattani, says that the 18 counties received Ksh. 11 billion.

The counties include; Baringo, Bomet, Embu, Garissa, Isiolo, Kiambu, Kirinyaga, Kitui, Machakos, Meru, Migori, Mombasa, Nandi, Narok, Taita Taveta, Tana, Tharaka Nithi, Vihiga.

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A further Ksh.7 billion was disbursed to 12 counties that had cleared their pending bills. These include; Elgeyo Marakwet, Homabay, Kajiado, Kericho, Kilifi, Kwale, Laikipia, Makueni, Nyamira, Nyandarua, Nyeri, Uasin Gishu.

Related; Treasury to Withhold Funds for 15 Counties

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Business

Kenyan to Steer Dalberg as Global Managing Partner

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Dalberg Advisors has announced the appointment of Edwin Macharia as Global Managing Partner for a 3-year term. Edwin term commences on 1 January 2020 and succeeds Yana Kakar who had been at the helm since 2013.

Prior to his appointment, Edwin has been with Dalberg for 11 years serving various roles. For instance, he founded Dalberg’s first office in East Africa in 2008, established Agriculture and Food Security Practice, and serves two terms as the Regional Director for Africa.

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“Edwin has spearheaded a lot of innovation into the new business lines within the Group. That will serve him well as he steps forward to lead Dalberg’s biggest and longest-standing business” noted Henrik Skovby, Dalberg’s Founder. 

Dalberg Advisors is a global consulting firm specializing in inclusive and sustainable business, policy, and investment strategy. Moreover, the firm combines strategy consulting, design thinking, big data analytics, and research to address complex social and environmental challenges.

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IMF blames Treasury’s flawed tax system for cash shortage : The Standard

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The decision by the Government to hold on to billions of shillings in tax refunds belonging to the business community has been blamed for the ongoing cash-crisis.

In a special review on the state of the economy in developing countries, the International Monetary Fund (IMF) singled out Kenya’s defective tax system as a major impediment to business growth.
An increasingly difficult operating environment has seen a number of companies shed jobs in droves.
Several surveys, including one conducted by the Central Bank of Kenya, show that optimism among investors has declined. 

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The large accumulation of Value Added Tax (VAT) refunds, which arises when credit for taxes on inputs exceed tax due on sales, is one way that has had a negative bearing on cash flow to businesses, and by extension, to Kenyans’ pockets.
A broad-based tax levied at multiple stages of production, VAT is in most cases levied on both inputs and outputs in the production chain. In Kenya, VAT is charged at the rate of 16 per cent on the final product.
According to the IMF, mechanisms employed by Kenya, Zambia, and Zimbabwe to respond to the challenge of large accumulation of VAT refunds has only made matters worse.

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These countries, said the IMF, have mostly established special tax treatments for particular taxpayer groups. This, explained the global lender, has further complicated administration of VAT.
Other mechanisms that have been adopted to tackle the problem of large accumulation of refunds have involved the buyer withholding part of the VAT that is payable by a supplier, in what is known as Withholding VAT.

SEE ALSO :Yattani squeezes Sh131b from agencies to fund Big 4

Reverse charge
There has also been the imposition of a “reverse charge,” to ensure that VAT due is paid to the government.
The result for these countries, explained the IMF, has been taxpayers paying more than they receive, thus amplifying the problem it was intended to address.
In a paper that examined the challenges faced by its 59 low-income developing countries, the IMF acknowledges that generally, managing refunds has been a thorny issue for tax administrators all over the world.
In Kenya, the Kenya Revenue Authority (KRA) has been under pressure to pay tax refunds running into billions of shillings. In a recent joint communique with the Kenya Alliance of Private Enterprises (KEPSA), KRA said it has paid Sh20.4 billion in tax refunds between July 2018 and October this year.

SEE ALSO :Senate slows State bid to grow debt to Sh9tr

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The taxman also established a team to facilitate the clearance of 6,000 VAT refund cases worth Sh27.6 billion outstanding as at the end of October.
In his budget speech, suspended National Treasury Cabinet Secretary Henry Rotich acknowledged that the accumulation of VAT refunds at the KRA due to VAT on zero-rated supplies has impacted negatively on the cash flow and liquidity for manufacturers and the business community at large.
“In order to fast track the return of these funds to the rightful owners, I have constituted a team at the National Treasury to quickly validate the outstanding refunds with a view to clearing them within the next two months,” said Rotich.
But huge refunds have also been a subject of a rigorous audit by the taxman owing to fears that some of these refunds have been fraudulently incurred.
KRA has, for example, unearthed a tax cheat syndicate in which 2,700 companies claimed 16 per cent VAT and 30 per cent relief on corporation tax. Known as the missing trader scheme, the syndicate would have seen the country lose close to Sh10 billion from VAT.

SEE ALSO :Meru and Kiambu hardest hit in clampdown on clinics

Guarding against fraud
The IMF notes that in an attempt to guard against such frauds, most low-income countries subject all refund claims to audit, even for taxpayers who regularly apply for refunds such as exporters, and without applying any risk profiling.
“As a result, the processing time for refunds can be months or even years,” states IMF.
The Government plans to reduce Withholding VAT from six per cent to two per cent to unlock funds held in VAT credits.
According to a new amendment to the Value-Added Act, 2103, taxpayers can also simply use the excess Withholding VAT to offset any other tax liability, including Pay As You Earn (PAYE), corporate tax, excise and customs duty
The IMF has recommended that Treasuries set aside part of VAT revenue to cover expected refunds.


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