The Treasury is racing against time to create a legal framework for county levies that it says have derailed economic development.
The proposed law is aimed at restricting governors from imposing, varying or waiving taxes in a manner that hurts the national economic policies and the movement of products like farm produce and cargo across the counties.
Under the proposed law, governors will be required to seek Treasury’s approval 10 months before introducing taxes or waiving existing ones.
Governors face renewed restrictions in their bid to raise internal revenues as the country prepares to ease its three months of economic lockdown.
The Treasury is racing against time to create a legal framework for county levies that it says have derailed economic development.
According to Treasury Secretary Ukur Yatani, the County Governments (Revenue Raising Process) Bill, 2018 which lapsed last year, has been re-submitted to the Attorney-General for refinement before tabling.
The Bill was introduced in September 2018 but lapsed in December last year after Members of Parliament delayed on its debate and passage.
“I am aware that the Bill which was sponsored by the National Treasury has recently lapsed... I have re-submitted the draft Bill to the Attorney-General so that it may be re-introduced in Parliament,” Mr Yatani said in his Budget Statement.
The proposed law is aimed at restricting governors from imposing, varying or waiving taxes in a manner that hurts the national economic policies and the movement of products like farm produce and cargo across the counties.
Under the proposed law, governors will be required to seek Treasury’s approval 10 months before introducing taxes or waiving existing ones.
Some governors have introduced levies considered oppressive to businesses and residents, forcing traders to pay for cess while moving goods and products.
Industrialists lobby Kenya Association of Manufacturers in March said that many types of fees at the counties have forced them to pass the costs to consumers, making local goods highly uncompetitive compared to imports.
Governors in March 2018 rejected the County Governments (Revenue Raising Regulation Process) Bill, 2017, saying it violated the constitutional functions and independence of the counties.
This forced the Treasury to redraft the proposed law and introduced the County Governments (Revenue Raising Process) Bill, 2018 in the renewed push to ensure that the devolved units do not ‘over-tax’ investors.
The devolved units raise revenue through charges that include licencing, parking, liquor licensing, county parks, beaches and cemeteries.
The collections have, however, been below-par due to loopholes in the collection systems, corruption, failure to automate and defaulting.
This has forced them to rely on the Treasury for funds for staff salaries, key services like health, payment of suppliers and construction of roads.
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Note: The results are not exact but very close to the actual.
