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TAXATION AT THE COUNTY LEVEL Uphold . Public . Interest SOUTH RIFT BRANCH By Hillary Onami Public Policy & Research Division - ICPAK 1 A review of County Levies, Charges and Taxes November 29 th December 1 st 2017
Historical Perspective Legal Provisions on County Taxation County Own Source Revenue enhancement Policy on Counties Own Source Revenue County Government Finance Bills Uphold . Public . Interest
INTRODUCTION Fundamental and simultaneous transitions political, economic, fiscal, administrative. Far reaching impact. At Independence, Kenya inherited a sub national government system of Local Authorities (LAs), whose basis was the Local Government Act (Cap. 265) rather than the Constitution. The LAs derived their revenue-raising powers from a variety of legal instruments including: The Local Government Act (Cap 265, sections 216 and 217) The Valuation for Rating Act Cap 266, and the Rating Act Cap 267: The Trade Licensing Act (Cap 497) and The Local Government Act (section 222). Uphold . Public . Interest
HISTORICAL CONTEXT CONT…. Uphold . Public . Interest Series of political reforms and Constitutional amendments led to the removal of LAs’ powers to Central Government ministries and departments i.e, Through the Transfer of Functions Act (1969), functions such as primary health and health services were removed from LAs, except in the seven major municipalities. Further removed the right of municipalities to levy the Graduated Personal Tax (GPT) which had been their most important source of revenue In 1989, the specific grants were replaced by a service charge levied on business premises and employees in formal and informal sector In 1998, the service charge was itself abolished, following introduction of the Local Authorities Transfer Fund (LATF) 2013 County Governments inherited all revenue streams that were previously being administered by the defunct LAs
INTRODUCTION ‘Big Bang’ Fiscal Decentralization 2013: PFM Act 2012 and Regulations 2015, PPAD Act 2015 Expenditure responsibilities for public service delivery decentralized to Counties Raises some very fundamental issues on administrative capacity, fiduciary management and accountability. Uphold . Public . Interest
Uphold . Public . Interest Tax is a compulsory payment that does not necessarily involve the use or derivation of direct benefits from services, regulation or goods as defined in Article 209(3) of the Constitution. User charge is a charge for the use of a product or service and apply per use of the good or service or for the bulk or time-limited use of the good or service i.e water services charge User fee