County governments will now have to seek Treasury’s approval before introducing or waiving taxes if a proposed government bill is passed into law.
The counties will be required to submit proposed changes 10 months before the commencement of the financial year. Under the proposed law, should the counties fail to comply, they will be limited from collecting the new county taxes.
The proposed bill which was brought to parliament by majority leader Aden Duale, aims to stop unnecessary taxes that would undermine national economic policies, distort cross-county trade, and inhibit the movement of goods and labor.
Some counties plan to increase parking fees, business permits, and land rates to boost revenues after the national government declined to allocate more cash to the devolved units.
The proposed bill will not affect the current taxes that have been imposed by the county governments.
The national government will have a difficult time implementing the proposed law, given that counties have the power to charge new taxes according to the constitution.
If the bill is passed, the counties will be required to provide reasons for new tax rates, fees, or levies to the national treasury and Commission on Revenue Allocation (CRA). The bill will require the County Executive Member in charge of finance to specify the collecting authority, persons responsible for remitting the collections, the methods, and costs of enforcing, and the compliance burden on the taxpayer.
The treasury will also require countries to provide the economic impact of the new rates and charges on individuals and businesses in the county.
Thereafter the treasury will review within a period of one month upon receipt of the proposal and notify the counties within three months of receiving the proposal of its decision to approve or reject the proposed rates.