Governors reject Treasury's bid to regulate revenue collection by counties

Kakamega Governor Fernandes Barasa shakes hands with County Attorney Vivianne Mmbaka Komwonyo after she signed her performance contract at the county headquarters on August 3, 2023. [Benjamin Sakwa, Standard]

The Council of Governors (CoG) has opposed a proposal by the National Treasury to form a committee to approve and regulate revenue collected by counties terming the move a threat to devolution.

CoG Finance, Planning and Economic Affairs Committee chairperson Fernandes Barasa said the National Treasury must respect the Constitution.

"As CoG, we reject a Bill that is sponsored by the National Assembly to create a committee that will be approving collection of revenue in counties. As far as we are concerned, this is a systematic attempt to claw back on devolution. Article 209 is clear on what the counties can do as far as the collection of revenue is concerned on property and entertainment," said Barasa, the Kakamega governor.

National government

The governor, who spoke in Kakamega on Thursday, was categorical that the creation of a committee to be chaired by the National Treasury CS and the Central Bank of Kenya governor, with the majority of members being from the national government, would be a threat to devolution.

"The Bill before the National Assembly is meant to amend the Public Finance Management Act (PFMA) by forming a committee chaired by the National Treasury Cabinet Secretary is unacceptable because this is an attempt to undermine devolution. The national government wants to start supervising counties on matters to do with revenue collection and this cannot work," he Barasa.

He added: "We are all aware that as counties, besides having equitable shareable revenue we also have the responsibility of enhancing devolved units' own source of revenue within the confinement of law and that is what we are doing and we have written a memorandum to the Senate with a view of rejecting the proposal by the National Treasury."

Relevant committee 

Barasa said governors are key actors of devolution and any Bill or proposal that touches on counties ought to have been tabled before the CoG first for relevant committees to give their views to the Senate and also engage their legal committee.

"We want a pragmatic law that will make it easier to have efficient delivery of service and for the record, we have no problem if the National Treasury is to provide guidance through the regulation in the PFMA in order to have efficacy in the collection of revenue, however, the idea of approving for us is not pragmatic," he said.

Treasury CS Njuguna Ndung'u before Senate Finance and Budget Committee at County Hall in Nairobi on Thursday, August 3, 2023. [Elvis Ogina, Standard]

On Tuesday, the governor revealed that the CoG Finance Committee appeared before the Senate to deliberate on the Additional Allocation Bill, County Government Bill 2023, and the PFMA 2023

"Our position is very clear, we totally reject the proposal of forming a committee chaired by the Treasury to approve taxes and levies proposed by counties,” he said.

The County Government Raising Revenue Bill sponsored by Kikuyu MP Kimani Ichungwa proposes that a county government may engage the Kenya Revenue Authority (KRA) or any other designated person as the revenue-collecting agent in accordance with section 160 of the Public Finance Management Act. 

Waivers and variations

“Any county tax or any revenue-raising measures including waivers and variations imposed by county governments prior to commencement of this Act shall be deemed to have been imposed, waived or varied in accordance with this Act,” reads the Bill in part.

The proposed law further provides that where the national and county governments fail to agree on a proposed imposition or revision of a tax, fee or charge, they shall be guided by the provisions of the Intergovernmental Relations Act on resolution of disputes.