LETTERS: Counties should stop punitive business licence fees

The new-found self-governance at the local level is threatening some businesses and the overall economic well-being of counties and the nation.

Instead of being enabling blocks that ensure businesses grow, some county governments have become a hindrances to economic progress through stifling SMEs and corporations by levying all manner of taxes and licence fees.

Lately, county governments have tripped over each other to become the first to announce a raft of unpopular revenue raising laws from businesses without the slightest regard to whether the move is economically sound or not.

The selfish money-minting declarations have hit businesses hard with some contemplating closing shop.

Nairobi, Kiambu, Mombasa, Kisumu, Bomet, Nyamira and a host of other counties have massively increasing basic business levies with Kiambu going as far as taxing the dead.

While counties must generate income for their day-to-day operations, they should not be so punitive that the kill businesses. Accountability calls for counties to conduct public participation to secure the endorsement of fees by stakeholders.

Some fee adjustments have been done without consultation with the public and the businesses owners, this is wrong.

The latest cash cows for county governments are land rates and rents. Nandi and Kericho, for instance, have revised land rates and rents upwards without consulting tea firms and local businesses. The Nandi County Finance Bill 2018 proposes that land rates be charged at three percent of the market value of land per acre for Kapsabet Municipality and its environs and two percent for Nandi Hills.

This is despite the fact that the county government has not involved tea firms and other stakeholders in making the decision.

How will the county government determine the value of land to be able to charge fair levies?

Isn’t it opening the floodgates to a host of ills including corruption? The status quo, which provides a clear way of paying and reviewing the rates should be maintained until a proper valuation roll is undertaken by relevant agencies. Nandi county government has also proposed to charge cess, or market fee, on tea at one percent of the prevailing tea market prices for large producers who, on their part, want the charge reviewed based on weight which is easier to calculate.

For small-scale tea retailers, the proposal is to double cess. A number of administrative declarations have been made without public participation. Such proposals are set to run against the best interest of the counties.

For example, contained in the Nandi Finance Bill 2018 is a clause which states that the executive can appoint any person to be the agent of the county for the purposes of collection or recovery of charges, fees, rent, rates or cess. Now, tea farms and small businesses are required to make all payments immediately, a time limit that the other stakeholders say is too short for logistical and practical purposes.

In addition, the county has revised up to 30 other basic licence fees for various business.

Nandi and Kericho counties are not alone. This trend is duplicated across the country. The two are prominent because any slight change in the rates will affect many households that depend on tea firms for survival.

These changes in levies are particularly hard for the tea industry, especially because of a depressed market where less than $2 is made per kilo at the auctions, equal to the production costs.

Let us re-think taxes, levies and fees at the county level. Let us also put emphasis on public participation while arriving at some of these figures.

This is paramount for sustainable socio-economic growth, other successful jurisdictions have done the same.

Unless stopped, the continued pressure on businesses to pay punitive levies — in terms of land rates and rents — and workers’ trade union’s resistance to innovation are steadily eroding investor confidence.

Unfortunately, this is happening within the context of a depressed global tea market in which the Kenyan produce is no longer competitive due to the ever rising production costs.

Morris Aron is a researcher and a writer