Kinuthia Mbugua’s executive order leads to Sh1b loss in revenue in Nakuru

Nakuru Governor Kinuthia Mbugua. Photo: Boniface Okendo, Standard

Nakuru governor's decision to cut rates and taxes in a bid to woo voters has returned to haunt the county.

According to a handing over report seen by The Standard, the county's revenue collection dropped by Sh1 billion in the 2016/2017 financial year.

At the peak of Jubilee Party nomination campaigns, Governor Kinuthia Mbugua reduced trade licence fees, hawker fees, market rates, and other taxes by around 50 per cent.

The report further states that another executive decision to decentralise revenue collection to various departments also hurt the county's annual income.

"At the beginning of the 2016/2017 financial year, the executive directed that every department be involved in revenue collection – something that saw a sharp decline in revenue collection," states the report.

The report also blames the reduction in revenue to arbitrary issuance of waivers by the member of the executive in charge of finance.

On Wednesday, Mr Mbugua held a lengthy meeting with members of the executive at the county headquarters along Moi Road during which the handing over report was extensively discussed.

"Issues raised in the report were discussed at length. The governor only urged us to ensure the information contained in the report was accurate," said a senior official who did not want to be named.

The report notes that the decision to decentralise revenue collection opened the floodgates to massive leakage of money, contributing to the decline.

"Departmental heads appointed staff who were loyal to them to collect revenue, which ended up in individuals' pockets," the report stated.

The decision violated the Public Finance Management Act, which gives the role of revenue collection to the county treasury department.

According to the report, three departments - the environment department that controlled cess barrier points, trade and industrialisation that collected market fees, and the lands and planning department that collects building plans fees and land rates - under-collected revenue.