Governors start harmonisation of taxes across counties

By Tobias Chanji and Roselyne Obala

Kwale, Kenya: Riots and demonstrations over taxes in the counties might soon be a thing of the past if an initiative by governors is successful.

The governors are looking to harmonise taxation in counties to lessen the burden on eligible residents and attract investors.

Finance laws passed by each of the 47 counties sparked violent demonstrations in some regions, as the measures were perceived to be punitive and a threat to businesses.

As the historic Devolution conference opened in Kwale yesterday, the county chiefs announced that they had made proposals for a Finance Bill that harmonises all taxation systems.

They invited public participation to formulate legislation that will create a business-friendly environment. Council of Governors chairman Isaac Ruto said of Governors Chairman Isaac Ruto said they would be looking at ways of ensuring that there’s a reduced red tape in operating businesses.

“We want to harmonise our taxation system by coming up with a Finance law that will attract investments, reduce taxation and shorten the process of registration (of businesses),” said Mr Ruto.

“We are also to engage the National Treasury in developing the Finance Bill, so that there is harmony in tax collection even at the national level,” added the Bomet County chief.

Ruto said counties are interested in offering competitive business opportunities to attract investors. “We want the private sector to understand us and move freely. We have decentralised power and resources and as governors, we will be competing to make our areas more business friendly,” said Ruto.

The Kenya Public Sector Alliance (Kepsa) Chief Executive Officer (CEO) Carole Kariuki and Chairman Vimal Shah challenged the governors to explore other means of generating revenue without raising taxes.

Punitive laws will scare away investors, Kariuki told the conference dubbed One Year into Devolution: Celebrating the Milestones, Confronting the Challenges.

“Counties can prosper in terms of development without collecting huge taxes from the business people operating in the area,” Mr Shah noted.

“In putting in place measures to ensure county governments generate internal revenue, the exercise should not hurt the local people,” said Kariuki.

Economic growth

Shah said public-private-partnerships (PPPs) in developing counties could boost economic growth. “All stakeholders must be involved in the process. If we are to achieve the double-digit growth by the Government, counties must be competitive. But this should not be achieved at the expense of the locals governed,” he said.

“We will be looking at all counties in engaging with investors depending on the needs of specific counties,” said Ruto.

The sentiments emerged during a panel discussion between governors and Kepsa at the conference held at Leisure Lodge Resort in Diani, Kwale County.

The meeting came before the main conference that starts today. Ruto urged the private sector to invest wisely, insisting that the county governments will provide them with a competitive environment.

“Let us engage. We are ready to listen and learn,” Ruto said. He argued that the bureaucracy has for a long time dogged businesses within the national government, but remained optimistic that with devolution in place, it is high time the practice was done away with.

According to Ruto, time for decision-making has now been shortened and it is a milestone in eliminating bureaucracy.

Asked why some counties have never passed a single Bill even after

one year into devolution, Ruto said they lacked personnel to draft laws but also blamed the Government Printer for delaying the publication of some of the Bills.

“Last year, county assemblies had a problem with the Salaries and Remuneration Commission, which is now settled. There was also a leadership problem as some counties did not have speakers,” he said.

Service delivery

Ruto noted that county governments have even done much better than the national government in delivery of service.

Counties have set aside 40 per cent of their budgets for development, said the Bomet Governor, which is higher than the national government’s allocation of 15 per cent to the county governments for the same.

“We are not in competition with national government, but we are working according to the Constitution,” he said, pointing out that the conference is a good shop for various counties to see what others are doing.

Ruto singled out water and road projects in the counties as being among the gains from devolution.