County governments are headed on a collision course with the national government over a legislative proposal that seeks to allow National Treasury to identify revenue sources in the devolved units as well as do the collection.
The proposal is in the County Governments (Revenue Raising Regulation Process) Bill 2017, which the Council of Governors (CoG) has rejected, saying it violates the constitutional functions of the devolved units.
The bill seeks to define the manner in which the National Treasury may exercise its policy oversight role and how the counties may exercise their taxation authority and indicate compliance burden to the taxpayers.
However, the sharp divisions between the two levels of governments are manifested on two fears.
Whereas the 47 regional governments believe that the Treasury wants to emasculate their constitutional independence on generation of revenue, the national government is adamant that any shortfall in revenue collection will ultimately affect essential development projects.
Turkana Governor Josphat Nanok, also the CoG chairman, is adamant that Treasury should be more concerned with developing regulations that can help counties identify revenue sources, and deal with double taxation.
“The council has examined the bill and recommended that the issues raised therein be codified into a policy that sets down uniform guidelines, which will assist counties to reach their revenue collection targets,” Mr Nanok said.
The bill seeks to regulate the county governments’ powers to impose, vary or waive taxes, fees, levies and other charges.
It also requires finance executives to justify imposition of the taxes, fees, levies and other charges.
Though the implication of the bill, according to Treasury, will cushion people from being subjected to arbitrary local levies if it is passed and signed into law, governors believe it opens room for manipulation of county functions.
During a recent meeting with a technical team from the ministry, CoG unanimously shot down the proposal, setting the stage for another round of tedious negotiations over the proposals in the Bill.
“This bill is not good for the counties. The counties have the capabilities and must be supported to perform their revenue collection functions as detailed in the constitution and the County Governments Act,” a governor, who did not want to go on record for fear of victimization, said.
At a recent meeting with the Senate committee on Finance and Budget, Cabinet Secretary Henry Rotich said the country is facing a shortfall of Sh84 billion in revenue collection.
The shortfall, he said, is partly attributed to the county government’s below par performance in revenue collection as also indicated in the recent reports of Controller of Budget.