The County Governments (Revenue Raising Process) Bill, 2023
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New Inter-Agency Approval Committee Established
The Bill establishes the Inter-Agency Committee on County Taxes and Charges under Section 4. Comprising representatives from the National Treasury, the Commission on Revenue Allocation, the Intergovernmental Relations Technical Committee, the Council of County Governors, and the Kenya Revenue Authority, this body is charged with reviewing and approving all proposed county tax and fee measures.
Strict Ten-Month Notification Timeline for New Charges
Under Section 5, county executive committee members (CECMs) for finance must submit any new tax, fee, or levy proposal to the Inter-Agency Committee at least ten months before the start of the financial year. The Committee is required to issue a written decision within three months, failing which the county may proceed with implementation.
Mandatory Reporting and Restrictions on Tax Waivers
Clause 6 prohibits the variation or waiver of any county tax, licensing fee, fine, or penalty unless authorized by legislation. Where a waiver is permitted, county treasuries must record each waiver, and the CECM must report the reasons to the Auditor-General within three months. Additionally, waivers cannot be granted to the same category of ratepayers in consecutive financial years.
Existing County Taxes Subject to Retroactive Review
Under Section 8, county governments must submit a comprehensive list of all existing taxes, fees, and charges to the Inter-Agency Committee within three months of the Act's commencement. The Committee must review these measures in consultation with the public and publish a list of approved, allowable charges in the Gazette within 30 days.
Bill No.
Senate Bills No. 22
Gazette No.
Supplement No. 72
Sponsor
AARON CHERUIYOT
Background
The principal objective of the County Governments (Revenue Raising Process) Bill, 2023, is to give effect to Article 209(5) of the Constitution of Kenya. This constitutional provision requires that a county government's power to raise revenue through taxes, fees, levies, and other charges must not be exercised in a manner that prejudices national economic policies, economic activities across county boundaries, or the national mobility of goods, services, capital, or labour.
Key Amendments
- Inter-Agency Oversight: Establishes the Inter-Agency Committee on County Taxes and Charges to verify and approve proposed local revenue-raising measures before implementation.
- Pricing Controls: Re-enforces requirements that fees charged for county services must not exceed the actual cost of providing those services, in compliance with Section 120 of the County Government Act.
- Dispute Resolution: Mandates that disagreements between the National Government and county governments regarding proposed taxes be resolved using the framework under Part IV of the Intergovernmental Relations Act.
New Obligations
- Advance Proposals: Under Clause 5, the County Executive Committee Member (CECM) for finance must submit county revenue proposals to the Inter-Agency Committee at least ten months before the commencement of the financial year.
- Detailed Impact Assessment: Submissions to the Committee must include detailed reasons, compliance evidence under Article 209(5), identification of liable taxpayers, enforcement mechanisms, administrative cost estimates, and projected revenue for the next three financial years.
- Waiver Tracking and Reporting: If a waiver is granted under permissible legislation, the County Treasury must maintain records of the waiver. The CECM must submit a report detailing the reasons for the waiver to the Auditor-General within three months of granting it.
- Restriction on Repeat Waivers: Prevents counties from granting a tax waiver to the same category of ratepayers in consecutive financial years.
Transitional Provisions
- Three-Month Submission Window: Within three months of the Act's commencement, county governments must submit a comprehensive list of all their existing taxes, fees, and charges to the newly established Committee for review.
- Thirty-Day Review and Gazettement: The Committee must review the submitted lists in consultation with stakeholders and the public within 30 days of receipt, subsequently publishing the list of approved, allowable county taxes and fees in the Kenya Gazette.
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