But then I read about the moving of the County Government (Revenue Raising Process) Bill.
The Bill (first drafted in 2017) says it gives effect to the requirement of Article 209(5) of the Constitution by defining how the national government can exercise its policy role. It sets out how counties can exercise their taxing powers. Basically, it tries to limit how counties exercise their powers to raise taxes and charge for services.
It says that any county wanting to introduce a new tax, fee or charge must submit details to the National Treasury (Ministry of Finance) and the Revenue Allocation Commission 10 months in advance. They must explain why they want it, how it will be administered and how people will be affected by it. The implication is that the Treasury may refuse to grant permission.
IS ANYTHING WRONG WITH THIS?
My sense is that this law steps beyond the powers of the national government under the Constitution. And that it fits into a pattern — namely that national government bodies and officers are often reluctant to accept that something changed in 2010.
Just as, in 1963, there was a sizeable segment of Kenyans (including the President) who did not want a second level of government, but wanted everything to be under their control — now certain segments cannot accept that, for the first time since just after independence, we have two levels of government.
And that the second level has certain powers that it is supposed to exercise without constant direction from the national government. Personal considerations can come in, too, as when Senators have looked at that second level.
Governors have envied them what seems to be their greater visibility, the people over whom they have authority, and, let’s be frank, their greater perceived chances of “eating”.
The Senate, especially, frequently promotes bills that are designed to tell counties how to go about their business of governing. Last year, the Supreme Court said that an Act creating County Development Boards that involved Senators who failed to “respect the functional and institutional integrity of the county government, its institutions and its constitutional status.”
CONSTITUTION’S VISION
The Constitution says that county and national government “are distinct and inter-dependent.” My sense is that too many at the centre focus on the inter-dependent and tend to forget the distinct.
But it means that counties are not part of the national government — this is different from the old local government. The phrase — though not word for word — comes from the Constitution of South Africa. That Constitution explains that each level of government must
(e) respect the constitutional status, institutions, powers and functions of government in the other levels (spheres);
(f) not assume any power or function except those conferred on them in terms of the Constitution; and
(g) not encroach on the geographical, functional or institutional integrity of government in another sphere.
This is essentially what the Kenyan Constitution is also providing.
Cooperation there must also be, but as Article 6 also says each level must “conduct their mutual relations on the basis of consultation and cooperation.” One has the feeling that the national level would like to turn everything into mutual relations. But counties don’t have to consult the national government about every little thing.
We should also remember that Article 174 of the Constitution includes among the purposes of devolution, “to recognise the right of communities to manage their own affairs and to further their development".
RAISING MONEY BY COUNTIES
Counties are given very limited powers to raise their own money. They can charge land rates — the one that raises the most. Apart from that they can only raise entertainment tax — which refers to an older Kenyan law charging tax on paid admission tickets.
Only if Parliament permits (by a law) can counties raise other taxes. In fact some have been raising what they call “cess”. The payment of cess does not give one any benefits, nor it is a form of regulating any activity.
It is just a money-raising device — a tax. There is no law allowing counties to charge this tax, and a few court cases have held as much — if not always very clearly.
Another sort of illegal tax includes things like a levy on hotel beds (at the Coast) and Kisumu county’s pool levy (on hotels with swimming facilities). If no service is received this is a tax. Calling it a levy does not change that.
Counties are constantly encouraged to increase their own revenues. And the Constitution says that providing incentives to counties to increase their revenue is one factor in deciding how money raised at the national level is divided between governments.
Yet it is hard for counties to do so. They are tempted — indeed encouraged — to charge for services, yet the Bill says that a fee must not exceed the cost of providing the service. This would mean there is little incentive to a county to impose fees — or provide the service.
LEAVE IT TO THE COUNTIES
The fact that counties are able to adopt policies and legal strategies that suit their own needs and their circumstances is a good thing. And it enables a bit of competition — counties can try to attract investment by the quality of the services they offer and the reasonableness of the charges for those services. This can’t be done by the national government for counties.
No super force tells the national government not to charge a certain amount for services. If Parliament approves, or gives the power to a Cabinet Secretary to fix, charges, no one can tell them this is illegal – unless it is also unconstitutional. At the county level this is the job of the county government and the county assembly.
For some purposes there may be a national government policy — as on health — that might have some control over county pricing. (The Constitution gives the national government the power to make health policy, among others.)
Even a county law providing for charges that affect trade between counties is not automatically unconstitutional. The Constitution just says that a national law on the same matter would take precedence.
Just because the Constitution says something must be done does not mean the national government can tell counties how to do it. Still less take the decision out of their hands. I don’t read Article 209(5) to require this Bill on county charges and fees — and taxes are already only allowed by law, as we have seen.
Counties, like national governments, must be given the chance to make their own mistakes. But if what they do is unconstitutional it can be challenged by anyone affected or even by anyone who wants to protect the public interest through the courts.
Certainly, financial management is complex. And the Constitution does provide for law on the subject (in Article 190(2)) and that law is the National Financial Management Act. But this revived Bill goes beyond how to manage “We shall decide for you."
The county system needs to be able to develop. And the national government including Parliament must get out of the frame of mind of the big school master teaching the children what to do. Or if there is any logic in the idea of the schoolmaster/child analogy then one must allow the younger to make its own mistakes or it will never grow.
In fact the Constitution does provide for a sort of educational process. Article 190 says national legislation may set out ways that the national government can ensure that a county follows the right financial management measures, and even in extreme circumstances to take over some functions for a while to put things back on track. And for really problematic situations in counties there is a big stick in Article 192.
National institutions have enough to do. Let county governments govern.
(Edited by V.Graham)
