The Council of Governors has rejected a proposal by the National Treasury to have a say on how county governments generate revenue through taxes, saying that it violates the constitutional functions of counties.
The proposal by the Treasury is contained in the proposed County Governments (Revenue Raising Regulation Process) Bill of 2017, which the governors say countermands how counties levy their taxes.
Speaking Monday after a full council meeting in Nairobi, Council of Governors chairman Mr Josephat Nanok said that the Treasury should be concerned with developing regulations that can help counties identify revenue sources as well as assist in curbing double taxation.
BILL
“The council has examined the Bill and recommended that the issues raised therein be codified into a policy that sets down uniform guidelines that will assist counties to reach their revenue collection targets,” Mr Nanok said.
The Bill also requires county executives in charge of finance to justify imposition of the taxes, fees, levies and other charges.
During the meeting, the CoG unanimously shot down the proposal presented to them by a technical team from the Treasury.
Instead, Mr Nanok said that a technical team from the council will work with that from the Treasury in formulating a policy that streamlines the counties’ revenue generation.
The implication of the bill if passed, is that counties will be required to submit tax proposals to the National Treasury and the Commission on Revenue Allocation at least 10 months before the beginning of every financial year.
According to the Treasury, the net effect of this provision is to cushion the people from being subjected to arbitrary local levies.
“This Bill is not good for the counties because it means that the national government will collect the taxes on behalf of the counties. The counties have the capabilities and must be supported to perform their functions as detailed in the constitution and the County Governments Act,” a governor, who did not want to go on record for fear of victimisation said.
TAXPAYERS
The Bill also seeks to define how the national government may exercise its policy oversight role and how the counties may exercise their taxation authority and indicate compliance burden to the taxpayers.
This comes as the office of the Controller of Budget indicated that as at June 30, 2017, the counties generated Sh24.7 billion, 41.4 per cent of the annual target of Sh59.7 billion.
The posting was a drop compared to the Sh25.89 billion or 46.9 per cent of the 2015/16 annual revenue target generated in the previous year.
During the council meeting, the governors also resolved to work with the ministry on environment to ensure that the country attains the world recognized forest cover of at least 10 percent.
Currently, Kenya has a forest cover of 7.3 percent. “The council will collaborate with the ministry to prepare a policy paper on logging and measures to adopt against deforestation,” Mr Nanok said.