KRA’s approach to devolution is giving an advantage to counties

The advent of devolution is often considered a major milestone in the development of all regions in the country.

Take a trip around the country, and you will see the dividend of devolution is being realised from infrastructure to agriculture and the expansion of health facilities as well as street lighting, to name but a few.

Indeed, more could have been achieved if more funds were provided to county governments.

The question, though, is how more funding can be generated for county governments.

Whereas they are largely financed from the Exchequer, the scope of growth for this source of funding is limited by other national priorities and commitments.

REVENUE

It is, therefore, imperative for county governments to generate additional revenue.

Evidence of great potential has been cited in many forums, including the County Revenue Baseline study by the Commission on Revenue Allocation.

It concluded that in the 2014/15 financial year, counties raised Sh33.8 billion against the potential of Sh40.8 billion.

This points to a revenue mobilisation challenge at the county level.

The capacity challenge (identifying optimal revenue streams, projecting potential revenue, determination of optimal levels (rates) applicable to respective levies and managing county debt), is can be seen by reviewing the revenue performance by counties against their own targets for 2015/16.

TARGET

A total of Sh35 billion was realised against a target of Sh50.5 billion, a performance rating of 69.3 per cent.

This can be greatly enhanced by leveraging on the expertise KRA has developed.

What counties should give prominence to is how to tap into ‘KRA’s experience repository’, which it will provide as a patriotic duty.

The other key area is policy definition of regulations and laws to be enacted at the county level.

The KRA has established semi-autonomous offices to ensure a viable presence in all the regions to respond to the county-specific needs.

AUTOMATION

In addition, heavy automation by KRA would serve county governments as its taxpayer database covers a large majority of rate payers and single business permit payers in the counties.

The county governments of Laikipia and Kiambu have signed Memorandums of Understanding with the KRA for the collection of land rates and single business permit fees.

The partnership shall leverage on KRA’s iTax platform with payment through any of the 37 banks in the payment gateway, as well as mobile phones.

Its implementation shall include a joint enforcement by both the KRA and county governments to nail defaulters.

Whereas the finance function in the counties is guided by the Public Finance Management (PFM) Act 2012, policy formulation is largely a Finance ministry role.

FINANCE BILL

This culminates in the drafting of the County Finance Bill for approval by the County Assembly.

A point of divergence with the national government is that whereas the county executive in charge of Finance (County Treasury) is responsible for policy formulation, he also has to source for funds as per the County Revenue Act, which is a vital dual responsibility.

The national government has a separation of roles between the Treasury responsible for policy formulation and the KRA, which mobilises tax revenue.

A fully functional corporate policy unit within the KRA reviews budget proposals and advises on the merits and demerits.

TAXPAYERS

This affords KRA an opportunity to contribute effectively towards policy formulation based on the day-to-day interaction with taxpayers and best practice, a competitive advantage that would be beneficial to county governments.

A partnership between the counties and KRA is a win-win situation.

Today’s business trend of specialisation (pursuing core mandate) frees organisations from handling other essential but time and resource-intensive activities.

This is efficiency, which a partnership with the KRA on revenue mobilisation accords county governments.

 Mr Korongo is the commissioner of domestic taxes at the Kenya Revenue Authority (KRA). [email protected]

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