Treasury seeks to have a say in how counties levy taxes

National Treasury building in Nairobi. FILE PHOTO | NMG
National Treasury building in Nairobi. FILE PHOTO | NMG 

Counties will have to submit tax proposals to National Treasury and the Commission on Revenue Allocation (CRA) 10 months before the beginning of the financial year as the State moves to discourage arbitrary local levies.

The County Government Revenue Raising Regulation Process Bill 2017 also requires executives in charge of finance to justify imposition of the taxes, fees, levies and charges.

The proposed law was published for public review last week. If passed in its current form, counties will also have to specify their tax collecting authority and indicate compliance burden on taxpayers.

“The Bill gives effect to the constitutional requirement of Article 209(5) of the Constitution by defining the manner in which the national government, through the National Treasury may exercise its policy oversight role and it establishes the process whereby the county governments may exercise their taxation authority,” said Treasury Secretary Henry Rotich in the Bill.

Treasury and the CRA shall within three months after receipt of proposals forward their views to the respective county governments.

The Bill has been drafted by an interagency working committee instituted by the National Treasury in March 2016 that was mandated to come up with a policy and a legal framework to support enhancement of county governments’ own source revenue.

Treasury Principal Secretary Kamau Thugge said in a notice that the public should submit comments on the policy framework and the Bill by Friday next week (September 15).

Data from the Controller of Budget (COB) for nine months for the year ending June 30 shows the 47 devolved units generated a total of Sh24.71 billion, which was 41.4 per cent of the annual target of Sh59.71 billion.

The Controller Agnes Odhiambo notes that the posting was a drop compared to Sh25.89 billion (46.9 per cent of FY 2015/16 annual revenue target) realised in a similar period.