Senator Aaron Cheruiyot seeks to change how counties impose taxes

Senate Majority Leader Aaron Cheruiyot. [Elvis Ogina, Standard]

The Senate Majority Leader Aaron Cheruiyot has tabled a Bill in the House seeking to have county governments planning to enforce taxes and levies submit the proposal to an Inter-Agency Committee at least 10 months before they act.

Mr Cheruiyot has sponsored the County Governments (Revenue Raising Process) Bill, 2023 which provides that whenever counties seek to impose a tax, the County Executive Committee member will be required to submit particulars to the committee 10 months before the commencement of the financial year.

The Kericho Senator recommends the setting up of the Inter-Agency Committee on County Taxes and Charges which shall consist of one person each working and nominated by the National Treasury Cabinet Secretary, the Intergovernmental Relations Technical Committee, the Council of Governors and the Kenya Revenue Authority (KRA).

"The Committee shall within three months from the date of receipt of the proposal under subsection (1), consider the proposal and notify the County Executive Committee member of its decision in writing and shall be responsible for considering and approving taxes, charges and fees imposed by a county government," said Cheruiyot.

The Bill recommends that the National Treasury provides secretariat services and facilities required by the Inter-Agency Committee which shall take into consideration the provisions of Article 209 of the Constitution and relevant administrative procedures, existing legislation and international treaties and agreements.

The Bill proposes that a county government may engage the KRA or any other designated person as the revenue-collecting agent of the county government in accordance with section 160 of the Public Finance Management Act.

Cheruiyot proposes that no tax or licensing fee including a fine or penalty may be waived or varied except as provided by legislation where legislation permits the waiver of any tax or licensing fee, the county treasury shall maintain a record of each waiver together with the reason for the waiver.

"Where the national government and a county government fail to agree on a proposed imposition or revision of a tax, fee or charge, the national government and county government shall be guided by the provisions of the Intergovernmental Relations Act on resolution of disputes," said Cheruiyot.

The Majority Leader seeks to have county government taxes to be consistent with co-operate governance as outlined in Article 6(2) of the Constitution, tariff and pricing as provided for under section 120 of the County Government Act, and that where a fee is proposed to be introduced for a service, it does not exceed the cost of providing such service.

Cheruiyot recommends that the County Executive Committee member shall within three months of granting of the waiver; report the waiver together with the reason for the waiver to the Auditor-General.

He said that if the Bill is enacted it will jump-start the constitutional requirement under Article 209(5) of the Constitution, which requires taxation and other revenue-raising powers of a county not be exercised in a way that prejudices national economic policies, economic activities across county boundaries or the national mobility of goods, services, capital or labour.

"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," said Cheruiyot.

He said this will be achieved by regulating the exercise by county governments of their power to impose taxes, charges, levies and fees by providing that a proposed county government tax, fees, levy or charge be in compliance with the Constitution and the provisions of this Bill.

However, the Bill does not set specific taxes that a county government may impose with the responsibility for initiating a county government tax proposal resting with the county government and they may propose any tax in accordance with the Constitution.

Article 209(5) of the Constitution, states that a county government tax shall not materially or unreasonably prejudice national economic policies, economic activities across county boundaries or the national mobility of goods, services, capital or labour.

Within one year from the date of commencement of the law, county governments shall submit a list of all taxes to the Committee for purposes of reviewing such taxes so as to ensure compliance with the Constitution.

Taxes currently imposed by county governments are deemed to have been imposed in terms of the Bill unless they are not in compliance with Article 209(5) of the Constitution.