Manufacturing companies say multiple charges by county governments are to blame for the increased cost of doing business, calling for a coordinated effort to rationalise the levies.
In the Manufacturing Priority Agenda (MPA) 2022 report, the firms say they have been confronted with multiple taxes and charges while traversing counties.
Fees and charges by the local governments include cess which applies to a wide range of raw materials and agricultural commodities.
“Devolution increased the cost of doing business, as county levies and charges are responsible for 45.8 percent of all charges,” Kenya Association of Manufacturers (KAM) say in the report.
“They are made to pay identical charges and levies in each county or in other situations make payments to the national and county governments for concurrent services or no services at all in some instances. This multiplicity is affecting intra-county and inter-county trade in Kenya.”
KAM says the levies imposed by the devolved units in a rush to raise revenue are discouraging investments while raising prices for the end consumer.
“Despite strides made at the country level with respect to the ease of doing business over time, county governments seem to have limited instruments to incentivise investors and provide a business-friendly environment,” KAM added.
The association has made several proposals to address the multiple charges by the local governments. One is the re-introduction of the County Government Revenue Raising Regulation Process Bill which aimed to harmonise levies by counties.
The drafted Bill sought to ensure that taxation policies of counties do not harm the national economic strategy, with the national government to be involved in vetting the charges by the local administrations.
“Where a county government intends to impose a tax, fee or charge, the County Executive Member for finance shall, ten months before the commencement of the financial year, submit particulars of the proposal to the National Treasury and the Commission On Revenue Allocation,” the Bill reads in part.