The National Treasury is proposing a framework that aims to assist county governments to enhance and streamline their revenue bases.
National Treasury adviser Fred Owegi said collections in local authorities were on an upward trend from 2003 to 2013 before starting to dip.
Hence, they have created a deficit in county budgets, affecting development.
Out of the Sh49 billion target for the last financial year, counties only raised Sh32 billion, or 66 per cent. Why?
During a presentation in the ongoing fourth Legislative Summit in Kisumu, Mr Owegi said many regional governments set unrealistic goals while others place theirs too low, yet they can make more money.
RULE OF LAW
He said the ministry will come up with a framework to regulate the introduction of levies by devolved governments.
“On many occasions, county governments have been creating revenue streams that are not anchored in law. The policy by the Treasury will cure that,” Mr Owegi said.
He added that proposed levies should be submitted to the National Treasury or the Commission on Revenue Allocation for review and ratification 10 months before the beginning of a financial year.
That would also apply to issuing of waivers and variations of levies.
Mr Owegi said some levies are inhibiting international protocol and agreements intended to ease trade.
He added that some devolved governments offered waivers irregularly. The national property taxation legislation is expected to replace pre-devolution laws.
It will include a national plan to facilitate the preparation of valuation rolls and counties becoming rating authorities. “The Land Act will be amended so that counties directly collect rent, which will also be revised upwards,” he said.
The 2010 Alcoholic Drinks Control Act would be amended and a national law prepared as a contingency for counties without such legislation to permit enforcement activities, he added.
Some of the interventions include counties developing revenue laws and policies anchoring levies, designate receivers of the revenue and establishing means by which the public can be involved in determining targets.
“The National Treasury will train employees in county departments on revenue collection and design a plan compatible with the integrated financial management information system,” Mr Owegi said.
County assemblies would be expected to develop procedures on reviewing audited accounts on revenue and do follow-ups, provide oversight and establish mechanisms on receiving, considering and determining petitions by the public on cash collection and management.
Six years into devolution, unrealistic targets, lack of automation and inadequate staffing are still the major challenges facing counties.