Generation of Own Source Revenue and Financial Sustainability in Garissa County, Kenya

Abstract

Based non-financial sustainability of Garissa County government and failure to achieve own source revenue targets from 2013-2018 and failure to allocate funds for development expenditure, this study aimed at assessing the generation of own source revenue on financial sustainability in Garissa County, Kenya. The study’s objectives were; to assess how county policies, county revenue administration and public consultations influences the financial sustainability in Garissa County, Kenya. The independent variables were; county policies, county revenue administration and public consultations while the dependent variable was financial sustainability. Some of the theories that guided the study are optimal theory of taxation which supports a tax system, stakeholder theory which argues that a firm should create value for its stakeholders. The study embraced a descriptive research design. The 5 key informants comprising County Assembly Budget Committee Chair, Governor and County Executive Committees sampled purposively were interviewed. The study targeted 150 employees from 30 wards and senior officials from Garissa County government. Questionnaires were issued to the 150 employees and interview schedules used to collect data from 5 senior officials. The research findings would hopefully improve management of taxation in county governments. The study results indicated county government does not have basic skills which act as a factor behind the low enforcement strategies. County income staff inherited from the former municipal government have no knowledge of the laws of taxation. Employees in revenue collection departments are not trained regularly on revenue management. The findings from model summary indicates that generation of own source revenue determines the changes in financial sustainability of the County government. It was established that county policies in generation of own source revenue, county revenue administration in generation of own source revenue and public consultations in generation of own source revenue had strong positive effect on financial sustainability. The study remarks that public participations were not involved in making revenue collection policy. The recommends that county government of Garissa should train the new employees on critical factors of management of revenue like preparation, scheduling, inspection, accounting, reporting and enforcement.