Kenyan counties accused of causing tax loopholes

United Nations (UN) Secretary General Ban Ki-moon (left) and Kenyan President Uhuru Kenyatta (right) attend the closing ceremony of the United Nations Environment Assembly (Unea) in the Kenyan capital Nairobi, on Friday. PHOTO I AFP 

 

By John Njagi ,The Citizen Correspondent

In Summary

“KSh9.9 billion was raised compared to the KSh4.5 billion and KSh4.7 billion raised in the first and second quarters respectively,” it notes.

Nairobi. County governments are using archaic ways of collecting taxes from locals, leading to tax loopholes that have resulted in unmet revenue targets, says a report by the Controller of Budget.

Others have fallen short of meeting their revenue targets due to delays in passage of the Finance Bills by their respective county assemblies, denying them the legal instruments to collect money from income-generating ventures in their areas.

 

The report by Ms Agnes Odhiambo says counties raised a paltry KSh19 billion against a KSh60 billion annual revenue target.

It explains the reforms and sealing of revenue-loss loopholes that the devolved units, which have existed for about two years, need to put in place in order to fund their programmes through their own taxes.

Already, most of the counties will feel the heat of unmet revenue shortfalls, as the anticipated income targets from taxes were expected to fund 23 per cent of the county budgets during the last financial year, but only 13.3 per cent of the figure was achieved.

Increased Revenues

However, increased revenues were realised between January and March this year, which was attributed to renewal of Single Business Permits that occurs within the three-month period, also referred to as the third quarter of the financial year.

“KSh9.9 billion was raised compared to the KSh4.5 billion and KSh4.7 billion raised in the first and second quarters respectively,” it notes.

The increase in the amount of revenues between January and March this year is also credited to the passage of county Finance Bills by a number of county assemblies during the period, which enabled them to collect taxes.

In her report, Ms Odhiambo says for counties to improve their revenue streams, there was a need to appoint receivers, who will run the process in a professional manner.