Economy
State agency liabilities swell by Sh540bn on tax, staff dues
Friday February 09 2024
The National Treasury building in Nairobi in this picture taken on March 15, 2023. PHOTO | DENNIS ONSONGO | NMG
The liabilities of State agencies grew by Sh540 billion in the past year on accumulated tax dues, employee obligations, and supplier pending bills, pushing their cumulative debts to Sh4.4 trillion.
During the financial year 2022/23, more than 500 State agencies, including parastatals, public universities, public funds, and semi-autonomous government agencies (Sagas), failed to pay Sh3.5 billion in taxes, pushing their total tax burden to Sh6.79 billion.
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Their burden arising from goods and services not delivered but paid for grew by 18 percent to Sh128 billion, as all employees’ benefit obligations that shot up by 19.8 percent to hit Sh22.9 billion.
The benefits include contributions to health insurance, retirement benefits, and others, which are deducted from workers’ salaries. Many agencies have not been submitting the money to respective destinations after deducting, leading to accumulation of the burdens.
The total liabilities for State agencies grew by 13.9 percent, from Sh3.89 trillion when the financial year started in July 2022, to Sh4.4 trillion as at the end of June 2023.
“The main contributors to the increase in total liabilities are trade and other payables by Sh2.459 trillion (56 percent) and borrowings, both current and non-current, by Sh482.617 billion (11 percent),” Treasury says.
Long-term borrowings increased by Sh58 billion to Sh434.3 billion during the year, but other borrowings reduced marginally to Sh48.3 billion.
“Trade and other payables as well as other long-term liabilities have seen a reduction in their composition of the total liabilities of State Corporations and Sagas. This implies increased efficiency in servicing the liability obligations and therefore enhanced relationships between the service delivery providers and the state corporations to which goods and services are supplied or delivered to,” it added.
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The state agencies grew their liabilities even as their cumulative revenues grew by a paltry 6 percent to Sh1.4 trillion, compared to the Sh1.355 trillion they earned in 2021/22.
“There was an increase in revenue under sales of goods and services at 16 percent and other income at 2 percent indicating an improved business environment,” Treasury observed.
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