Bill seeks to cut county powers to impose tax
6 months ago, 9 Mar 00:32
The state has crafted a radical bill to clip county governments authority to impose taxes and other levies, signalling a renewed standoff with devolved units. The Treasury has drafted the County Governments [Revenue Raising Regulation process] Bill 2017, giving CS Henry Rotich sweeping powers to examine and approve taxation proposals by all counties. Currently, county governments do not need the Treasury’s approval of their revenue raising measures, including imposition of taxes, levies and service charges. Under the current law, county executives prepare Finance bills - which spell out taxation measures - for approval by respective county assemblies. The governors then sign the bills into law, automatically effecting the taxation measures. However, the proposed law seeks to establish a new regime in the process by which devolved units exercise their powers to impose, vary or waiver taxes, fees, levies and other charges. Signaling a looming crisis, the Treasury is seeking an enhanced ‘policy oversight’ role to approve all revenue raising measures proposed by counties before they take effect. “Where a county government intends to impose a tax, fee or charge, the county executive member for finance shall, 10 months before the commencement of the financial year, submit particulars of the proposal to the National Treasury and the Commission on Revenue Allocation,” reads the bill in part. This means before counties table their Finance Bills - the legal instruments effecting taxation measure - they must first have been scrutinised and approved by the Treasury and the CRA. Included in the submissions to the Treasury will be justification for the imposition of the tax, particulars showing compliance with the Constitution, persons liable for any relief or exemptions. Counties shall also specify the revenue collecting authority, the persons responsible for remitting the collections, the method and likely cost of enforcing compliance as well as the compliance burden on taxpayers. In what could open a floodgate of petitions from opponents of taxation measures, the Treasury and CRA may consult any other organ of state or interested persons on the proposals. “On receipt of a submission…..the national Treasury and commission shall not later than three months after receipt, forward their views to respective county governments,” the bill says. The devolved units shall also give the estimation methods used to determine the amount of revenue to be collected on annual basis over three financial years. Also to be availed will be the economic impact on local individuals and businesses, economic impact on development in the county as well as particulars on consultations conducted in the county and affected counties. The proposed law ostensibly seeks to protect the national government’s economic interests from shocks occasioned by adverse taxation and levying regimes by devolved units. Article 209 of the Constitution gives separate powers to county governments to impose property rates, entertainment taxes and any other tax that it is authorized to impose by an act of parliament. Counties are also allowed to impose charges on services they provide. Only the national government can impose income tax, value added tax, ...
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