Public Finance and Taxation in Kenya: Tools and Theories at the Service of Citizens

Abstract

Public finance is an economic activity that allocates financial resources to achieve public affairs goals. The government raises revenue and spends it on public goods and services to maximize its citizens' social, political, and economic welfare. public finance plays a special role in promoting economic growth in developing countries besides maintaining price stability. Public Expenditure Management (PEM) is the process that allows governments to be fiscally responsible (spend what they can afford), spend on the right things, and make the most of limited public resources. The role of Parliament in public finance is an oversight. Parliament approves the legislation which empowers ministers to carry out their policies. Design and prescribe an efficient financial management system for the national and county governments to ensure transparent financial management and standard financial reporting. The taxation system in Kenya is broad, covering income taxes, value-added tax, and Customs and excise duty. These are governed by independent legislations that make provisions for the charge, assessment, and collection of the respective taxes.