Counties barred from imposing illegal mining taxes

The National Treasury ministry has warned Kwale and Mombasa county governments against imposing illegal and unconstitutional taxes on an Australian mining company.

This comes following a demand by Kwale that Base Titanium company pays a Sh5,000 levy for each tonne of minerals, with Mombasa seeking a Sh3,000 cess per container.

Treasury Cabinet Secretary Henry Rotich condemned the move in a letter dated September 12, addressed to Kwale Governor Salim Mvurya and his Mombasa counterpart Hassan Joho.

In the letter, Mr Rotich told the counties they could not impose property rates, entertainment taxes and any other taxes until authorised by an Act of Parliament.

“We have received legal advice from the Attorney-General’s office indicating that county governments can only impose taxes as provided in the Constitution of Kenya,” he said.

The minister said the national and county governments may impose charges for services they provide as allowed in the law.

He added that the Constitution states that taxation and other revenues shall not be exercised in a way that prejudices national economic policies, cross county activities or national mobility of goods, services, capital or labour.

Mr Rotich said imposing such taxes would ruin the investment climate in the country as well as discourage private investment flow which is a critical component for economic growth.

“We advise that while making these tax decisions, follow the law and consider adverse effects that they may have on the economy,” he said.

The Cabinet Secretary said that the Treasury is ready to support the county governments in formulating appropriate Finance Bills upon request.

This came a day after Transition Authority chairman Kinuthia Wamwangi directed Kwale County to suspend demand for the levy.