Win for traders as Ruto seeks sanity on county levies
President William Ruto (centre), Deputy Rigathi Gachagua, Chair of Governors Ann Waiguru and other leaders during a consultative meeting with county governors in Naivasha, Nakuru County on February 10, 2023.
Plans to tackle multiple levies and additional allocation of funds from the equitable revenue sharing are some of the enticements by the Kenya Kwanza administration in the fiscal year 2023/2024 budget to improve investments and service delivery.
The County Government Revenue Raising Bill 2023, proposed by National Treasury Cabinet Secretary Njuguna Ndung'u in the budget, is aimed at eliminating double taxation that derails investment in the devolved units.
To boost trade in the counties, the CS has included the Sh2.9 billion royalty arrears owed to 32 counties as at June 30, 2022 in the current year's budget.
Small and medium enterprises have in the past felt the heat of highly prohibitive tariffs imposed by various counties, slowing the growth of their businesses.
"Traders, especially in the transport and logistics or agriculture sectors, have long been affected by multiple levies when transporting goods from one county to another where they are charged higher fees. The new tax law will help boost intra-county trade," said Mr Willy Kenei, chairman of the Uasin-Gishu County chapter of the Kenya National Chamber of Commerce.
Traders interviewed said some of the levies imposed by county governments scare away potential investors because of double taxation and encourage corruption because of lack of transparency in the use of revenues.
"Some of these levies such as land cess and property taxes are too high compared to the cost of investment, making it difficult for counties to attract potential investors for various businesses," said Mr Joshua Koech, an investor in Eldoret town.
Among the levies traders want to see reviewed are property taxes and business licences, catering and land rates, which create double taxation and discourage investment.
Fair share
Prof Ndung'u allocated Sh385.4 billion to counties as a fair share from the national levy and another Sh11.0 billion as additional conditional allocations from the national government's share of revenue to improve service delivery.
He allocated Sh442.1 billion to county governments, up from Sh370 billion in the 2022/2023 budget, to enhance smooth county operations and service delivery.
The provision is higher than the Sh425 billion the Council of Governors demanded for the counties' equitable share for this financial year.
Counties are to receive Sh33.2 billion as conditional allocations from development partners and a further Sh12.5 billion as unconditional allocations.
Among the counties that will receive the lion's share of the equitable share of national revenue are Nairobi (Sh20 billion), Nakuru (Sh13.6 billion), Turkana (Sh13.1 billion) and Kakamega (Sh12.9 billion).
Lamu will get Sh3.2 billion, Tharaka Nithi Sh4.4 billion, Elgeyo Marakwet Sh4.8 billion, Isiolo Sh4.9 billion, Taita Taveta Sh5 billion while Embu, Nyamira and Vihiga will get Sh5.3 billion each.
As part of the initiative to ensure food security, which was a key campaign item for the Kenya Kwanza administration, the CS allocated Sh49.9 billion to the agriculture sector — one of the devolved functions — up from Sh46.8 billion.
The fertiliser subsidy programme received Sh4.5 billion, the Small Scale Irrigation and Value Addition Project Sh1.4 billion, while the Kenya Cereal Enhancement Programme received Sh2.1 billion.
To protect the local fishing industry, the government introduced a levy on imported fish of Sh100,000 per tonne or 10 per cent of the value.
