- As of June 2022, the county generated Sh9.2 billion in taxes, a far cry from its target of Sh19.2 billion.
- From land rates, the county collected Sh2.5 billion out of its Sh7.5 billion target in the last financial year.
PSV vehicles dodging paying taxes, businesses refusing to register with KRA for Nairobi revenue collection and suspension of the construction monitoring system were the main cause for dismal tax collection in the city.
A fiscal strategy paper by the Johnson Sakaja administration tabled in the county assembly shows that the county has been missing its revenue target by far, explaining why services in the city has been poor consistently.
The paper drawn by Finance executive Charles Kerich shows the county did not receive conditional grant from the National Treasury because it did not meet some conditions.
With shortfall in the own source revenue generation, the county accumulated hefty pending bills and by December 2022, had a total debt of Sh99 billion.
As of June 2022, the county generated Sh9.2 billion in taxes, a far cry from its target of Sh19.2 billion.
From land rates, the county collected Sh2.5 billion out of its Sh7.5 billion target in the last financial year. The county explains that the failure was because of not implementing the new valuation roll after some property owners in the city objected to it, making the county to revert to a 1982 system.
Parking fee, which is the mainstay of the county for own source revenue, has also been affected after motorists devised a way to evade it. It collected Sh1.87 billion out of the target of Sh3 billion.
Some PSVs and Saccos are terminating away from their designated spots where they are required to pay rates, hence evading.
“The underperformance is attributed to PSVs terminating outside the Central Business District, thereby evading payment of season parking fees,” the paper reads.
Also, it blames the National government for occupying various parking bays and not paying up.
Various parking slots have also been converted to walking ways and pavements, hence starving it off revenue.
“Non-payment for occupied parking bays by government entities; loss of parking spaces due to conversion of parking bays into walkways and closure of parking bays like law courts are the reason for not achieving the set target,” the document says.
To address the situation in the 2023/2024 financial year, Kerich says the county will cascade the administration of the parking fee collection to areas outside CBD where the PSVs are now terminating in its widening net efforts. It will also follow up with the National government to pay up their dues and create new parking spaces.
Also, expect an energised drive of clamping and towing wrongly parked and unpaid up vehicles in the near future as the county mounts aggressive revenue collection drive, the paper says.
For single business permits, the document says the county collected Sh1.4 billion against a Sh3 billion target.
“The deviation from the target was due to closure of the old National Bank Revenue Collection System and migration to Nairobi Revenue Collection system introduced by Kenya Revenue Authority following transfer of the revenue collection function to KRA.”
After the transfer of the collection function to KRA, most residents declined to pay dues to the national tax man, making the county to lose revenue.
“…majority of clients declined to register [with KRA] and [the] lack of robust enforcements mechanism which was further compounded by the electioneering period,” it said.
To correct the situation, the county will automate generation and “cascade inspection and enforcement in all subcounties, continuously update business permit register and increase number of licensed businesses from the current situation where only about 250,000 businesses are in the database.”
The collection from the building permits also took a hit. The county only collected Sh591 million, a far cry from its Sh1.5 billion target.
The suspension of the e-Construction system which resulted in the delays in construction approvals for over six months is to blame.
Also, it said, the new system which does not give approval for application without title deeds hence reduction in the number of approvals and payments.
Regarding advertisements and billboards, the county netted Sh926 million against Sh1.2 billion target and this is blamed on lack of necessary equipment for monitoring and enforcement operations.
“In order to enhance revenues in this area, the county will enhance Geo-referencing of all the large format structures which include billboards, sky signs, wall wraps, clock adverts, multiple signage and LED screens.”
-Edited by SKanyara