- Despite the potential to finance 40 per cent of its budget, its own source revenue increased by less than one per cent.
- City Hall loses about Sh188 billion in uncollected land rates every financial year.
Image: FILE.
City Hall missed it's third quarter revenue target by Sh2.5 billion, continuing its dismal revenue collection.
The county raised only Sh4.1 billion between January and March, against a target of Sh6.6 billion.
However, the collection had a slight improvement of Sh100 million from the last financial year.
County assembly budget and appropriation committee chairman Robert Mbatia said it was a good improvement despite the fact that many businesses in Nairobi had been greatly affected by the Covid-19 pandemic.
Mbatia explained that several challenges including an overstretched Revenue collection system, weak legislations, pilferage and lack of capacity to collect has contributed to the declining revenue collection.
He said that currently, Nairobi county is undergoing serious downtime challenges on the revenue collection system because the vendor shuts it down every time they are not paid.
“These challenges have been recurring yearly and the fact that up to date the county doesn't know its revenue potential shows how serious the situation is,” Mbatia said.
The county collects most of its revenue from the third quarter. It is the period when land rates and single business permits, top two revenue stream for City Hall, are paid.
Last week the Commission of Revenue Allocation flagged the county’s collections, saying its revenue increased by less than one per cent despite the potential to finance 40 per cent of its budget.
Nairobi has the potential of collecting Sh77 billion, but only managed Sh10.7 billion.
Reports by the Controller of Budget have been showing a constant decline in Nairobi's annual revenue collection, missing its own targets.
Siding with CRA, the budget chair agreed that Nairobi has the potential of collecting Sh77 billion. This can be realised by introducing a new revenue system & revision of the valuation roll.
Since Kenya Revenue Authority (KRA) is now collecting revenue for the county, collection has improved. "The taxman efforts are promising."Mbatia said.
Nairobi county revenue collection improved by 25 per cent to Sh3.9 billion over the first six months in the current financial year, thanks to KRA.
The county had collected Sh3.1 billion in 2019-20FY before KRA took over the revenue collection role.
Mbatia who is also Kariobangi South Ward rep said there are several measures which the county should put in place in order to improve revenue collection in the next financial year.
“Revising the valuation roll will automatically increase revenue collection by billions,” he said.
Currently, property owners pay land rates at 25 per cent of the unimproved site value-based on the 1980 valuation roll.
City Hall loses about Sh188 billion in uncollected land rates every financial year.
A report by the Commission on Revenue Allocation and the European Union shows that Sh75.6 billion is uncollected in Nairobi with another Sh112 billion not mapped out in the geographical information system.
The revised draft valuation roll is heading to a public participation stage on June 18.
Other measures being considered include mapping out the revenue potential of the county, boosting the morale of the Revenue clerks by facilitating good working environments and sensitising residents on the importance of paying taxes, fees and charges.
“As the assembly, we will play our part and ensure that collected revenue is put into good use. We will also put in place legislations to enhance and ease revenue collection,” Mbatia said.
(Edited by Bilha Makokha)