Grade 6 Social Studies Political Systems And Governance – Sources Of Government Revenue And Expenditure Notes
Sources of Government Revenue and Expenditure
Topic: Political Systems and Governance — Subject: Social Studies (Kenya) — Age: 11
Revenue is the money the government gets so it can run schools, hospitals, roads and pay workers. In Kenya this comes from the national government and from county governments.
1. Main sources of government revenue (money coming in)
- PAYE (income tax from workers' salaries)
- VAT (Value Added Tax) on many goods and services
- Excise duty (on goods like petrol and some drinks)
- Customs or import duty (tax on goods brought into Kenya)
- Fees (e.g., passports, driving licences)
- Fines (e.g., traffic fines)
- Licences and permits (business permits)
- Dividends from state companies and rent from government property
- Grants and aid from other countries or organisations (e.g., for roads or schools)
- Loans from banks or other countries (must be paid back)
- County own-source revenue: property rates, market fees, parking, single business permits
2. Where the government spends money (expenditure)
Government spending is what the money is used for. We usually divide it into two main types:
- Salaries for teachers, nurses, police and civil servants
- Pensions for retired workers
- Buying supplies, electricity, water and repairs
- Paying interest on loans
- Building and repairing roads 🛣️
- Constructing schools and buying desks 🏫
- Building hospitals and buying medical equipment 🏥
- Water projects, bridges and irrigation for farmers
3. Who spends the money?
- National government: big projects, national security, national hospitals and universities, roads between towns, NG-CDF (funds in each constituency for local projects).
- County governments: local hospitals and clinics, water supply, local roads, markets, street lights, refuse collection.
When the government spends on a new classroom, it is development spending. When it pays the teacher's salary, it is recurrent spending.
4. Short class activity
- Write two examples of taxes collected by KRA.
- Name two services the county government pays for.
- Why should the government be careful when borrowing money?
1. Examples: PAYE, VAT, import duty, excise duty.
2. County services: local health clinics, water supply, street lighting, markets, local roads.
3. Because loans must be paid back with interest; too much borrowing can cause problems for future budgets.
Simple visual: 🪙 = money in, 🏫/🏥/🛣️ = money out to build services that help people in Kenya.
(Use these notes to discuss how money moves in government and why it is important for both national and county leaders to plan carefully.)