This archive report was first published on 7 October 2019.
Kenya's county governments have made significant strides in tax collections, with revenues rising to a record Sh40.3 billion in the financial year ended June 2019. However, despite the improvement, the collections still fell short of the estimated potential.
According to an analysis by the Controller of Budget Office, the revenue improved from a four-year low of Sh32.49 billion achieved in the previous financial year. The improved collection was attributed to improved efficiency in revenue collection.
Thirteen counties, including Lamu, Vihiga, Taita Taveta, Narok, Elgeyo Marakwet, Isiolo, Nakuru, Bungoma, Tana River, Kwale, Laikipia, Kirinyaga, and Kiambu, exceeded their annual targets. The counties that missed their targets by far included Migori, which achieved only 25.9 percent, Wajir (30.1 percent), Kisii (36.1 percent), Garissa (43.3 percent), Meru (44.8 percent), and Nandi at 45.4 percent.
Counties get their revenue from market and trade licensing fees, parking fees, land rates, liquor licensing, county parks, beaches, and public cemeteries. They also control licensing of domestic animals and casinos. The improved collection still trailed the targeted collection of Sh53.86 billion.
During the period under review, Nairobi City County generated the highest Own Source Revenue (OSR) at Sh10.24 billion, followed by Mombasa and Narok at Sh3.71 billion and Sh3.12 billion respectively. The top seven counties with OSRs above Sh1 billion were Nakuru (Sh2.8 billion), Kiambu (Sh2.74 billion), Machakos (Sh1.55 billion), and Kajiado with Sh1.07 billion.
Laikipia and Kakamega had the fastest growth, with OSR of Laikipia growing by 97.4 percent to Sh815.79 million and that of Kakamega rising by 94.8 percent to Sh858.3 million. Others with above 50 percent growth were Busia, Embu, Kajiado, Kiambu, Kilifi, Makueni, Mandera, Migori, Murang'a, Nyamira, Taita Taveta, Tharaka Nithi, and Trans Nzoia.
However, the improved collection was overshadowed by a 40.9 percent rise in sitting and travel allowances to Sh8.6 billion, which pushed up recurrent spending by 13.5 percent to Sh269 billion of the total expenditure of Sh376.43 billion. This means development spending was Sh107.44 billion, being only 28.5 percent of total spending.
The Treasury still believes more could be done to enhance OSR. It is recommending transferring of land rates collection role from National Lands Commission role to counties, which will increase efficiency in revenue administration. The Treasury also called for digitisation of the title deeds, centralising all the county land registries, and introducing technology-backed valuation rolls to match market prices of properties.
