How officials are swindling counties of billions of shillings in collected taxes

County governments have not been meeting their tax targets and this has been a major concern for stakeholders.

Most counties, especially those in major towns, have introduced new levies, yet their revenue collections are still below target. Some are even reporting much less than what the defunct local authorities collected.

According to the latest Auditor-General’s report, revenue collection by county governments has dropped by a whole 40 per cent and the question is why this is so.

It is emerging that tricksters, mainly county executives, have been conspiring to steal billions of shillings of revenue collections with impunity. In the end, the figure declared is less than the actual amount collected.

Auditor-General Edward Ouko has released reports from 29 counties and all indicate failed revenue targets.

Some counties, including Nairobi, Mombasa and Machakos have even digitised revenue collection, especially for parking, yet the basket is still shrinking.

The county executives allegedly detain millions of shillings of collected revenue and only declare a portion of it for approval by the Controller of Budget (CoB). It is a requirement that counties do not access banked revenues until they get approval to spend it from the CoB’s office.

Nairobi collected Sh1.6 billion from parking fees alone between July 2013 and June 2014, but the audit reveals some 72 million of the amount cannot be accounted for.

“Daily returns as per the Parking Department showed a total collection of Sh1,680,132,742, while total parking revenue as per Laifoms amounted to Sh1,607,494,953, resulting in unreconciled and unexplained variance of Sh72,637,789,” the report states.

RAISING QUESTIONS

The report further reveals that though the county generated Sh5.5 billion as revenue, only Sh 5.2 billion was banked, raising questions on the whereabouts of Sh252 million. This amount was not banked, neither was its expenditure approved by CoB.

Kisumu anticipated Sh1.8 billion in revenue collections in the year under review. However, the reported collection was Sh526 million. Yet out of this amount, only Sh492 million was banked. It remains a puzzle how Sh34 million was spent.

“In the period under review, the county government realised total local revenue collections of Sh526,479,919 against revised budget of Sh1,800,739, 230 from sub-counties and the city of Kisumu,” said the auditor.

The report further states: “This represents a 29 per cent performance and no explanation has been provided for the underperformance.”

The same scenario is replicated in Vihiga County, which did not meet its tax targets.

“The county government collected revenue from other sources amounting to only Sh113,709,508 against a budgeted amount of Sh197,000,000, resulting into unexplained under-collection of Sh83,290,492,”the report revealed.

Things were not different in Mombasa where Sh496 million was not banked after the county received Sh1.7 billion in tax collections from local sources.

The CoB’s office has continually raised concern over failure by counties to meet their tax targets, even as the devolved units continue pushing for more money from the national government.

In Garissa County, only 29 per cent of the projected Sh150 million was raised.

“Examination of revenue records such as cash books and bank statements revealed Sh39,513,178 which represents 26.2 per cent of the amount expected was collected as at 30 June 2014, meaning Sh110,986,821.6 was not collected,” the auditor said.

In Vihiga, the auditor recommends investigations into the decline in revenue collection that has fallen by a massive Sh83 million. “Investigate the reasons for decline of total revenue collection with a view to recover any lost revenue,” the auditor says in the report.

PROJECTED REVENUE

Vihiga County had projected revenue collection of Sh197 million in the year under review but only Sh113 million was banked.

The report recommends the strengthening of internal controls on local revenue management to avoid pilferage.

Though the office of the CoB had reported that Homa Bay County had projected a revenue collection of Sh403 million from its local sources, the prospects fell and only Sh134 million was realised.

In Kitui, some county government officials have continued to bank revenue collected into the accounts of the defunct county governments.

The move led to the loss of Sh5 million, which was withdrawn but not accounted for, says the report.

In Mandera County, even though the government revenue collection was put at Sh437 million, records show only Sh97 million was collected, raising questions as to why the county failed to hit its target.

“However, examination of revenue records such as cash books and bank statements revealed a total of Sh97,445,692.35, representing 22.2 per cent of the amount budgeted, was collected as at 30 June 2014, resulting in an uncollected revenue balance of Sh339,954,307.70,” says the report.

This comes as Nairobi is experiencing challenges in implementing the electronic ticketing to collect parking fees because officials who have been corruptly benefiting from the manual system are against it.

According to the 2013/2014 report, four county governments — Nairobi, Mombasa, Nyeri and Meru — may have been swindled or lost billions of taxpayers’ money due to failure to observe accounting and procurement procedures, or to outright theft by managers.