Plans by the Mombasa county government to collect levy from the port of Mombasa have hit a dead end after Attorney General Justin Muturi said it is beyond its powers.
In the Mombasa County Finance Bill 2022/2023, the county has proposed Port Users Infrastructure and Support Maintenance Levy to be charged at a rate of $5 per imported motor vehicle, $10 per container per TEU, and $0.5 per metric tonne of all loose cargo.
The bill excluded charges on all transit and export cargo.
Mombasa Governor Abdulswamad Nassir has had several meetings with President William Ruto and Transport Cabinet Secretary Kipchumba Murkomen on the new proposal.
On the New Year's day, Ruto paid a courtesy call on Nassir at his office and later at night hosted the governor and other coastal leaders at State House, Mombasa.
On January 11, Ruto and Nassir met at State House, Nairobi, whereby Nassir disclosed that the national and county governments would be working in collaboration on various projects to improve the lives of the people of Mombasa.
A week ago, Nassir met with Murkomen at his office at Transcom House, Nairobi, to discuss how Mombasa will get its share of port revenue.
“I expressed my commitment to working with the national government to ensure that Mombasa benefits from the port's economic activities. The port is a major source of income for residents of our county and it is important to ensure that the county government is fully involved in the decisions that shape the industry,” Nassir said.
He said Murkomen expressed his commitment to working together with Mombasa county to ensure they get their fair share of port revenue.
“We agreed to set up a joint technical team to look into the issue of port revenue sharing and to come up with recommendations on how the county government can receive its fair share of income from the port. The technical team is expected to submit its report shortly,” Nassir said.
However, it has now emerged that Ruto’s administration will not allow Mombasa county to collect revenue from the port after all.
“It is our considered opinion that the county does not have the powers to impose a levy on any goods imported into the country. This function is the exclusive responsibility of the national government as provided under Article 209(1) (c) of the Constitution,” the Attorney General said.
The AG advised that going forward any county that seeks to impose a tax or implement other revenue-raising measures should do so by seeking concurrence of the National Treasury Cabinet Secretary and the Commission on Revenue Allocation.
Mombasa county government had written two letters- on January 9 and January 16 - to the Attorney General seeking legal guidance on the imposition of the County Port Users Infrastructure Support and Maintenance Levy.
The Ministry of Transport had also on January 16 written to the AG on the same matter, saying it had noted that some proposals in the bill would have a negative impact on transport and the wider economy.
The Ministry of Transport stated there was a need for the national government to intervene in the bill.
It said the bill was likely to cause disruption in international port services and international trade at the various points of entry, notably at the port of Mombasa, Moi International Airport, and Mombasa Rail Terminal, which provides cross-border services.
“The proposal will affect the competitiveness of Mombasa port as the strategic gateway to east and central Africa region,” the Transport ministry said.
According to the Attorney General, Article 209 of the Constitution provides for the powers of the national government and the county government to impose taxes and charges.
Article 209 (3) gives county powers to impose property rates, entertainment taxes, and any other tax it is authorised to impose by an Act of Parliament.
On the other hand Article 209 (1) vests in the national government exclusive powers to impose certain taxes including income tax, value-added tax, customs duties and other duties on import and export duties and excise tax.
The AG said they have noted that the Port Users Infrastructure Support and Maintenance Levy targets imported motor vehicles, containers and loose cargo to the exclusion of all transit and export cargo.
The levy to be imposed is general and does not provide for a specific category of motor vehicle, container or loose cargo.
“However, accordingly, matters related to international and national shipping are not within the powers and functions of the county government,” said Muturi.
“While it is appreciated that the county government carried out extensive public participation in the proposal. It is our considered opinion that the county government should strictly adhere to the provisions of the Constitution and the Customs and Excise Act.”
Muturi said the county government should have sought the advice of the National Treasury Cabinet Secretary and the Commission on Revenue Allocation as guided by Section 161 of the Public Finance and Management Act, 2012.
A section of Mombasa county leadership on Wednesday expressed their disappointment with the letter from the Attorney General.
Speaker Aharub Khatri said the county government does not seek to control the port of Mombasa but to get a certain percentage of revenue to benefit the region.
“Before the bill was passed, it went through public participation. The bill is clear that Mombasa should benefit from the port revenue and does not seek to control the port of Mombasa,” Aharub said.
He said they have not officially received the advisory from the AG’s office, but they have seen it doing rounds on social media.
Khatri said the port of Mombasa pays Mombasa county about Sh30 million per year on land rates only, but they use the county infrastructure including roads, street lights and so many others.
“The projects that go on within the port, for example, the county never receives anything as it is supposed to for the permits and approvals,” Aharub said.
Deputy Speaker Fadhili Makarani said they were hoping that the national government would approve the bill, but they have been since disappointed with the new development.
“We are now going to sit down as the County Assembly Finance Committee to discuss the details of the advisory and then seek an audience with the governor on the way forward,” Makarani said.
