The Government has challenged counties to boost the Own Source Revenue (OSR) to meet their fiscal deficits.
Prime Cabinet Secretary, Musalia Mudavadi said counties must be more robust in terms of untapped areas of revenue collection to not only enhance their tax base but also make them better functioning entities.
“We need to get our counties becoming more robust and we look forward to a situation where one day the Kisii Governor, for instance, will be the one lending money to the National Government,” said Mudavadi
“In the past, there is something that went wrong, which was governing our entities and at that time they were not drawing money from the National Government, there was no revenue share but the same local governments were able to pay salaries… What happened when the revenue share mechanism came in, did we encourage some measure of laxity? This is an area that needs to be done very fast,” he added
Even as he challenged counties to improve on tax collection and get more people within that framework, the PCS said they must bear in mind that they are also dealing with a major economic issue, which needs to be managed carefully.
“How do you make your counties competitive? Taxation is elastic. On revenue collection, you must figure out on what you would do to make sure that you are not taxing investors out of your city because with excessive taxation you can drive them out of town and erode own tax base. Explore a balance of this,” said Mudavadi
He made his remarks after delivering the Deputy President Rigathi Gachagua’s speech during the official opening of Inaugural conference for Local Government Revenue Initiative (LoGRI) conference in a Nairobi hotel.
Gachagua made similar sentiments, noting that enhanced county OSR is premised on the need for enabling counties to expand and improve service delivery, county financial autonomy in fulfillment of devolution and overcoming constraints in external funding.
Similarly, he said OSR will promote better remuneration to county staff because enhanced it may imply better pay for county workers and better enumeration increases productivity.
“Justification for enhanced county OSR is also premised on the need for accountability and efficient revenue management for OSR compliance. Ratepayers and consumers of County services will demand better service delivery from the OSR collected. Mismanagement of OSR automatically leads to non-compliance in the collection of OSR and poor service delivery,” Gachagua stated.
