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Treasury moves to restrict counties from adding taxes

By Frankline Sunday | Published Fri, September 8th 2017 at 00:00, Updated September 7th 2017 at 23:29 GMT +3
National Treasury CS Henry Rotich

In summary

  • Proposal comes following claims of high cost of doing business in the regions
  • Bill sets out requirements on imposing new charges on citizens as well as exemptions

Treasury is seeking to bar county governments from introducing new levies for at least one year.

The measure is meant to standardise the establishment of new county taxes, fees, and licences.

This is part of proposals in the County Governments (Revenue Raising Regulation Process) Bill, 2017 published on Wednesdya by the National Treasury.

The proposed law spells out new requirements counties must fulfil before slapping taxpayers with new levies.

County administrators will now be required to seek approval from several bodies, including the Treasury, the Auditor General, and the Commission on Revenue Allocation before introducing new charges.

“Where a county government intends to impose a tax, fee, or charge, the county executive member for finance shall, 10 months before the commencement of the financial year, submit particulars of the proposal to the National Treasury and the Commission on Revenue Allocation (CRA),” reads Section 4 of the Bill proposed by National Treasury Cabinet Secretary Henry Rotich.

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County officials will be required to give the reasons for the imposition of the new fee as well as details about the persons who will be liable to pay it. The same rule applies to waivers, with the Auditor General expected to sign off on any proposed exemption by counties before their implementation.

The Bill comes on the back of sustained criticism levelled against several county administrations in the past, who have been accused of unilaterally introducing levies and raising the cost of doing business across the 47 regions.

In 2013, Kiambu County introduced a levy seeking to collect taxes from the dead. The new charges, which were later nullified by the High Court, proposed a payment of Sh4,500 to bury an adult and Sh3,000 and Sh2,500 to bury a child and an infant respectively in one’s own compound.

Kakamega County also drew ire from residents with a plan to introduce burial fees and a Sh20 levy to be charged for each chicken kept in an urban area.

The Kenya Association of Manufacturers and the Kenya Private Sector Alliance has also expressed concern that counties were charging duplicate taxes that saw firms harassed when moving their goods across county boundaries.

County governments will be required to prove their capacity to collect the levy efficiently by providing details of the agency responsible for making the collections. An assessment of the compliance burden on the prospective taxpayers as well as the cost of enforcing it will also be required.

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