Governors: Why we rejected law on tax by National Treasury

Council of Governors Finance and Economic Affairs Committee chairperson Joyce Laboso (Bomet)
Missed revenue targets and an alleged scheme by the Government to control how counties generate money informed governors’ decision to reject a tax bill by the National Treasury, it has emerged.

Governors Tuesday expressed strong feelings against the proposed law, describing it as an attempt to “create bureaucracy” that would starve the devolved units of resources to run projects.

Details of how governors on Monday told officials from the National Treasury that they would not entertain discussions around the County Government (Revenue Raising Regulation Process) Bill 2017 have also emerged.

Council of Governors (CoG) Finance and Economic Affairs Committee chairperson Joyce Laboso (Bomet) said the council resolved not to have any discussions with Treasury about the bill.

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Instead, the council called for the formation of two technical teams from both sides to come up with policy regulations to help the counties meet revenue targets.

“It should come out clear that we are not talking about the bill. We rejected it at this stage,” said Dr Laboso.

“It is like the Treasury is trying to control the counties. The bill would essentially curtail county governments from collecting revenue. Focus should be on guidelines to raise revenue and meet targets we have set,” she added.

The Bomet governor added that Treasury should limit itself to advisory provision rather than come up with laws on revenue collection in the devolved units.

Laikipia Governor Ndiritu Muriithi said the justification by Treasury in coming up with the bill made no sense at all.

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“Treasury is aware most counties are currently not meeting their targets. And what do they tell us? ‘You are not raising enough, let’s introduce a law.' How does the law help the counties (by) creating bureaucracy that will prevent counties from raising money?" he asked.

Technically wrong

“I don’t want to say there was mischief on the part of the national government in coming up with the bill, but it is technically wrong.”

Nyandarua Governor Francis Kimemia said expanding the revenue base would enable county administrations to “reach areas that are not currently being taxed”.

The 47 counties are expected to get Sh55.9 billion from local sources and Sh25.17 billion as cash balance of the 2016-2017 fiscal year, according to the Controller of Budget’s first quarter report for 2017-2018.

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According to the proposed law, the devolved units would have to get approval from Treasury before imposing taxes.

“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,” reads the proposed law.

The law is intended to control arbitrary levies by the county governments that have, in some cases, resulted in protests by residents.

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National Treasurytax billRevenue Raising Regulation ProcessCouncil of GovernorsJoyce LabosoTaxesKRA