Kenya: Govt Planning Revenue Collection Law to Curb Taxes that Scare Investors Away

Posted on :Friday , 24th March 2017

The government is developing a national legislation to guide counties on revenue collection.

This follows complaints that some devolved units had come up with prohibitive taxes that have scared away investors.
The guide is meant to check on the unnecessary levies that are way above what the business community can afford and remain in business.
National Treasury Cabinet Secretary Henry Rotich said a review of the fees charged by counties will also include increasing rates paid for properties like land that currently doesn't match the current market rates.
Speaking during a legislative summit in Mombasa, Mr Rotich said counties must be innovative to raise more money at the local level without burdening residents of their regions.
Property tax
He said there are properties even in rural areas that can be taxed as part of efforts by counties to raise their own revenue and stop over-relying on the national budget.
"There must be an incentive for people to hold the government accountable and the only way to do that is to tax them, " said Mr Rotich.
He revealed that 90-95 per cent of county revenues comes from the national treasury, hence why accountability is very weak at the counties.
Deputy Controller of Budget Stephen Masha said only 10 per cent of total revenue available to counties comes from their own collections.
In 2015/16 financial year, counties, he said, counties only managed to raise Sh35 billion out of a projected revenue of Sh50.5 billion.
During the 2016/17 financial year, the devolved units have collected less than Sh14 billion in the first six months, an indicator that they will not realise this year's Sh57 billion target by the end of the financial year in June.
Not inclusive
Mr Joseph Mwaniki, a Member of County Assembly from Embu blamed the governor for the unrealistic figures, saying the budget-making process is usually not all inclusive.
"In some counties, a governor sits with a small clique of cronies in his office and decide on the county budget. This is against the law," Mr Mwaniki said.
He added that public participation has become a mere formality that is never taken seriously due to an unclear legal framework on how the process should be undertaken.