Governors to seek Treasury nod for new taxes

Governors will have to seek the Treasury’s approval 10 months before introducing new taxes or waiving existing levies if a proposed government Bill is adopted into law.

The counties must submit proposed changes 10 months before commencement of the financial year in which they intend to introduce levies, vary existing ones or waive charges and accrued interest, says the Bill.

The Treasury reckon that the proposed law is aimed at curbing taxes that could undermine national economic policies, distort cross-country trade or impede movement of goods and labour.

“The Bill does not set specific taxes that counties may enact. Rather, the Bill regulates the process by which county governments taxes are imposed,” said the proposed law.

This Bill could yet become the biggest test to the national government’s ability to challenge decisions by counties, which can charge new taxes using powers granted to Kenya’s regions under the Constitution.

The first crop of leaders, whose term ends after the August 8 elections introduced a raft of higher taxes that shocked the business community and pushed property rate waivers at the whims of governors.

Nairobi governor Evans Kidero more than doubled parking fees while Alfred Mutua lowered land rates to woo investors as several waived penalties to encourage payment of arrears.

The central government in Nairobi had opposed the new levies proposed by the local authorities, warning that they could undermine economic growth.

Mombasa governor Hassan Joho shocked the market when he defied opposition from the national government and introduced new taxes on shipping containers.

The Kenya Ports Authority failed to collect the levies proposed by the county government, arguing it would be illegal for the port to do so.