•There is no definite timeline for county assemblies to approve tax laws, albeit many do so by September 30.
•To restore order, Kenya Kwanza wants all county finance bills enacted by June 30 of each financial year.
Image: KIMANI ICHUNG'WAH
President William Ruto’s administration seeks to set a deadline for members of the 47 county assemblies to pass the devolved units’ tax laws.
There is no definite timeline for county assemblies to approve tax laws, but many do so by September 30.
The existing law exempts the Finance Bill from the items Finance executives must submit to the county assembly by April 30.
An executive is to present budget estimates, supporting documents and bills to implement the budget by the deadline.
The law says the devolved parliaments should pass the tax law not later than 90 days after passing the law which authorises spending.
There are also concerns that some levies are impractical - if not hilarious.
Kenya Kwanza thus wants all county finance bills enacted by June 30 of each financial year to get orderly county budgets.
The national government implemented the June 30 deadline after a court declared that MPs could not enact tax laws after approving the budget.
A bill sponsored by Majority leader Kimani Ichung’wah seeks to make this the case for county governments.
“The County Assembly shall consider and pass the County Finance Bill, with or without amendments, in time for it to be presented for assent by June 30 each year,” the proposed law reads.
The aim, he says is to, align the timelines for the passing and consideration of the Finance Bill by the county assemblies and the National Assembly.
The Bill requires Finance executives to submit their respective finance bills by April 30.
“It is also to provide for clarity and harmonisation of timelines for passing of the Finance Bill between county assembly and National Assembly,” Ichung’wah says in the proposed law’s memorandum.
Members of County Assembly will also be required by law to ensure that they set revenue projections accurately.
“Any recommendation made by the relevant committee of the County Assembly or resolution passed on revenue matters shall ensure the total amount of revenue raised is consistent with the approved fiscal framework.”
Many counties have been spotlighted by the Auditor General, Controller of Budget and Commission on Revenue Allocation for missing revenue targets.
They have over time attributed the low collections to weak enforcement and controls, low automation and unrealistic targets.
The bill further seeks to bar MCAs from setting taxes that are hard to collect, which are among the issues that CRA has cited in its previous reports.
In this regard, the county lawmakers will be required to “take into account principles of equity, certainty and ease of collection.”
The proposed law further requires that MCAs consider the impact of changes in the composition of tax revenue ‘with reference to direct and indirect taxes.’
Counties willalso be required by law, should MPs approve the bill, to consider the impact of taxes on development, investment, employment and economic growth.
“The Bill seeks to align the practice in the county assembly to that of the National Assembly in the consideration of the Finance Bill,” Ichung’wah says.
If approved, county assemblies will be required to follow similar procedures for submission, consideration and passing of the tax law as that of the national assembly.
The bill comes against the backdrop of a recent report which revealed that nearly all counties have failed to hit their source revenue collection targets since 2013.
They include Nairobi, Nakuru, Mombasa and Kisumu city counties, which are billed as endowed with huge resources.
Others are Uasin Gishu, Trans Nzoia, Bungoma, Kiambu, Kajiado, Murang’a, Kisii and Kakamega, which either border city counties or have major towns.
In the first six months of the current financial year, for instance, Nairobi collected Sh3.69 billion, representing only 18.7 per cent of the Sh19.42 billion annual target.
In the six months, Mombasa generated Sh1.62 billion in own-source revenue, representing 26.8 per cent of the Sh5.25 billion annual target.
Kisumu collected Sh426.28 million or 18.7 per cent of an annual target of Sh1.68 billion.
In total, all 47 county governments collected merely Sh19.95 billion or 24.9 per cent of their annual target of Sh80.20 billion in the first half of the year.
Senators looking into county spending earlier raised concerns about whether the revenue targets are genuinely missed or the collections are not declared fully.
Counties receive money from the national budget, of which Sh446.4 billion is proposed this year, and is supposed to augment with internal revenue streams.
The Division of Revenue Bill, 2024, which contained the equitable share of revenue to the counties and the national government, is currently being considered by the Senate.