Enact policy to boost revenue in counties, say accountants - Daily Nation

Enact policy to boost revenue in counties, say accountants

Sunday April 15 2018

ICPAK chairman Julius Mwatu and vice chairperson Rose Mwaura at a press conference. Mr Mwatu has said ICPAK is willing to work with county governments to realise their revenue potential. FILE PHOTO | NMG

ICPAK chairman Julius Mwatu and vice chairperson Rose Mwaura at a press conference. Mr Mwatu has said ICPAK is willing to work with county governments to realise their revenue potential. FILE PHOTO | NMG 

By SHABAN MAKOKHA
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Accountants want a policy meant to boost revenue collection for counties urgently debated and implemented to help the regions meet their growth plans.

The Institute of Certified Public Accountants of Kenya (ICPAK) says the policy, officially known as the Enhancement of County Governments’ Own Source Revenue, will be key to helping local administrators arrest continual missed targets.

It says they perused the numbers for most of the western region counties and found they had underperformed in revenue collection largely because most of their targeted areas had policy gaps.

ICPAK chairman Julius Mwatu said reports reveal a worrying trend in revenue collection, adding that the counties are likely to stagnate in their operations if they are not supported. “As an institute, we are ready and willing to partner and support county governments to enable them realise their revenue potential,” said Mr Mwatu.

“The Treasury should urgently implement the policy on own source revenues because it can provide a good basis for counties to generate revenues.”

Developed by the Treasury, the policy, which is still under discussion, is meant to support counties with proper legal systems, clarify assignments for revenue collection, boost opportunities for levies and improve counties’ cash collection systems as well as seal loopholes.

According to the law, counties have about five sources of revenue which include a national equitable share of at least 15 per cent of collected revenue, additional conditional grants from the Treasury, Equalisation Fund based on half of one per cent of revenue raised nationally, local taxes, charges and fees as well as loans and grants from donors often guaranteed by the Treasury.

Counties are supposed to raise local revenue from entertainment taxes, charges on services they provide and other licence fees as authorised by the law. As it is today, counties nationally collect just about 12 per cent of their total budgetary needs.

Accountants now say the policy could further define the different taxation areas for national and county governments to avoid incidents of “straying”. Nationally, for example, the Constitution allows collection of income tax, value added tax, custom duties and excise duty.

Counties, on the other hand, are supposed to focus on property rates, parking fees, licences, rents, water and sewerage fees, entertainment taxes and service charges and must await parliamentary approval for any other tax they intend to levy.

In Busia, for instance, Governor Sospeter Ojaamong recently lamented he could no longer collect parking fees as the country was implementing an open borders policy to enhance trade. That means truckers no longer park and wait for clearance at the border since most of their goods are cleared at the port of entry in Mombasa.

But speaking at Golf Hotel in Kakamega during the launch of western branch ICPAK office, Mr Mwatu lauded the launch of the border post. He said the initiative will improve efficiency in immigration clearance and ease the movement of people and goods across the two countries and the region at large.

“The one-stop border post is a demonstration of the political commitment in the integration process,” he said.