Tough laws loom as counties seek to enhance revenue collection

By JACKSON OKOTH

A person or company found conducting business within a county without a trade licence could soon face a court fine of up to Sh100,000.

It is also an offence to provide misleading information when applying for a trade licence, attracting a fine of Sh50,000 for those convicted by the courts.

These penalties are contained in a handbook written by Michael Wright, a legislative drafter. The Draft County Revenue Legislation Handbook has three draft bills, which county governments could adopt to enhance revenue collection dealing with property rates, trade licences and county revenue administration.

“There is need for county laws to be revised to meet revenue goals,” said Wright yesterday at a meeting on Consultative Forum on Model Bills for County Revenue Enhancement, which attracted officials from various county treasuries.

In the recent past, loud protests have emerged within counties as residents and traders oppose new levies and all manner of taxes  imposed by county governments. Owners of conservancies and ranches are being asked to pay more to county governments.

For instance, Kiambu County residents recently moved to court to challenge its Finance Act, which they say was passed without public participation.

Figures indicate that only Nairobi and Nyeri counties are able to collect more revenue than actual projections. The rest have widening budget deficits and increasing pressure to make ends meet.

County governments have the legislative power to impose property rates and charge certain licence fees. For instance, counties can license businesses that sell food, issue trade and liquor licences, and license dogs.

Alcohol licensing

However, most county governments are yet to draft laws that will allow them to licensing alcohol businesses.

The European Union has already offered assistance in drafing several bills, including the Disaster Management, Fire and Rescue, Early Childhood Education, Homecraft Centres and the Transport bills.

Early this week, the Commission for Revenue Allocation (CRA) warned that the devolved units face huge revenue shortfalls in the next financial year, raising fears that the delivery of critical services particularly in the health sector stands the risk of grinding to a halt.

CRA chairman Micah Cheserem said counties are headed for serious financial stress that will include disruption of services of the devolved functions and accumulation of pending bills. He said taxpayers could be forced to shoulder the extra burden of increased levies, fees and other charges as county governments resort to painful revenue raising measures to balance their books.

“Counties will be forced to resort to imposing painful revenue raising measures to bridge their budget deficits,’ he told the Parliamentary Budget and Appropriation committee.