In Summary
  • Early this year, a study by the National Treasury established that Own-Source revenue (OSR) collections by counties are up to four times below the minimum potential.

  • The OSR potential and tax gap study revealed that the 47 county governments can raise a minimum Sh124.7 billion annually.

The Auditor-General has fingered counties for failing revenue collection with some missing their targets by up to Sh7 billion.

What makes it worse is that over the last four years, all the 47 county governments registered a significant shortfall in the collection of their own generated revenue.

POTENTIAL

In the 2017/2018 financial year report, the Auditor-General warns, continued decline in budgeted local revenue and its collection may hamper or compromise service delivery.

According to the report,the Nairobi County target was to collect Sh17.22 billion in the 2017/18 financial year, but it ended up collecting Sh10.15 billion, which was an under collection of Sh7.07 billion, 41 per off the mark.

In fact, according to the report, the total amount collected as own source revenue in the 2017/18 was lower than what the county collected the previous year which was Sh10.93 billion, a reduction of Sh775 million.

“No reasons have been given for the reduction in revenue collected and failure to meet budget projections,” the report, signed by retired Auditor-General Edward Ouko says.

The reports were tabled in the Senate on Tuesday.

Early this year, a study by the National Treasury established that Own-Source revenue (OSR) collections by counties are up to four times below the minimum potential. The OSR potential and tax gap study revealed that the 47 county governments can raise a minimum Sh124.7 billion annually.

In the financial year 2017/18, county governments aimed at raising Sh49.2 billion in OSR but only managed Sh32.5 billion, similar to collections in 2016/17, a massive Sh92.2 billion below the potential.

PROJECTIONS

Nevertheless, OSR out-turn in the financial year 2017/18 was better (66 per cent) than  in 2016/17 (56.4 per cent), which had a higher target (Sh57.7 billion).

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