REPORT ON THE REVISION OF THE NAKURU COUNTY FINANCE ACT 2013

1. REPORT ON THE REVISION OF THE NAKURU COUNTY FINANCE ACT 2013 BY: THE COMMITTEE ON FINANCE BILL 2014

2. INTRODUCTION • Pursuant to Section 132(1) PFM Act 2012, a committee spearheading the revision of the Finance Act 2013 was constituted on the 16th May 2014 consisting of 6 members.

3. TERMS OF REFERENCE • Coordinate the revision of the taxes and fees levied according to Section 132(3) (a) of the PFM Act 2012. • Coordinate activities leading to participation of Citizens and interest groups with the Sub Counties in the preparation of the Draft Finance Bill. • Analyze the impact of proposed changes on development, investments and growth. • Identify new sources of revenue as per the devolved functions. • Compile the Draft Finance Bill for Tabling to the Executive before onward transmission to the County Assembly.

4. DELIBERATIONS OF THE COMMITTEE • The committee held its first meeting on the 26th May 2014. The committee’s structure was formalized through the election of a Chairman, Vice Chairman and a Secretary. • A program was then set up to deliver the committees’ mandate which would factor in consultations with Sub County Administrators, County Revenue officers, representatives from various County Departments, business community, members of the public and other stakeholders. • Further a secretariat was constituted with two additional members with the specific role of collecting, analyzing and recording all memoranda from stakeholders.

5. DELIBERATIONS OF THE COMMITTEE • The committee sent out invitations to the members of the public and other stakeholders, through leading dailies (Nation, The People’s Daily and the Star newspapers) on Thursday 29th May 2014 and Friday 30th May 2014, informing them of the process of the revision of the Finance Act 2013 and therefore inviting them to forward their proposals/memoranda on the same. • Further, the Committee also sent out letters to various line ministries through their respective Chief Officers and to the Sub County Revenue Officers on Monday 9th June 2014, requesting them to send their Proposals/Memoranda on the revision of the Finance Act 2013.

7. STAKEHOLDER’S ANALYSIS • The committee acknowledged the importance of carrying out a stakeholders’ analysis at the beginning of the process so as to identify the key stakeholders, assess of their interests and the ways in which these interests affect the process of the revision of the Finance Act 2013 and the viability of the entire exercise. • It was important to identify from the onset the below: • The interests of stakeholders in relation to the process’ objectives. • The actual and potential conflicts of interest between the stakeholders’.

8. STAKEHOLDER’S ANALYSIS • To identify the viability of this process and its impact of the proposed changes on development, investment, employment and economic growth. • To create an overall picture on how this process should be carried out. • To identify relationships between different stakeholders.

9. STAKEHOLDER’S ANALYSIS • The committee then came up with the stakeholder’s analysis report detailing: • The stakeholders’ stake in project • Their impact on the process, • What the committee would expect from them, • The stakeholders’ perceived attitudes and risk, • The stakeholders management strategy and their responsibilities.

10. STAKEHOLDER’S ANALYSIS • This would help the committee to consider all those who will be directly affected by this process and think about how this process might also be affected by them. • The committee then set up a Stakeholders’ Engagement Matrix that outlined the considerations taken and to be taken in the future communication/association with the stakeholders.

11. DELIBERATIONS WITH THE REVENUE OFFICERS AND VARIOUS DEPARTMENTS. • The Committee held meetings with the Sub County Revenue Officers and representatives from various departments on Wednesday 11th June 2014 to Friday 13th June 2014. • The committee then consolidated the Draft Finance Bill 2014 after careful consideration of all the inputs from all stakeholders who had presented their proposals through Memoranda.

13. PUBLICITY AND AWARENESS DRIVE • The committee is committed to ensure complete openness, accountability and public participation pursuant to Section 132(1) of the Public Finance Management Act together with the provision of Article 201 of the Constitution. To adhere to the above, the committee set out the below measures. • Publishing a Public Notice in the Newspapers (Nation, Standard and The Star Newspapers) on Sunday, 17th August 2014 and Monday 18th August 2014, informing the members of the public of the Draft Bill and inviting them to submit comments and proposals on the same.

14. PUBLICITY AND AWARENESS DRIVE • The committee also publicized the Draft Bill through local radio stations namely, Radio Amani and KassFm. • Dissemination of over 2000 copies of the Draft Bill to the members of the public, through Sub County Administrators, for their deliberation and feedback before a scheduled public participation meeting. In addition, copies of the draft bill were circulated to the Chairmen and Secretaries of over 35 stakeholders comprising of business associations from all sectors of the economy.

15. PUBLICITY AND AWARENESS DRIVE • Pursuant to the section 161 of the Public Finance Management Act (PFM) 2012 which requires County Government to seek the views of the Cabinet Secretary to the National Treasury before imposing any tax or revenue raising measures under the article 209 of the Constitution, the committee sent out copies of the Draft Bill to the Cabinet Secretary, National Treasury as well as to the Chairman of the Commission on Revenue Allocation. The Committee is still waiting to receive feedback from these National Government Entities.

16. PUBLICITY AND AWARENESS DRIVE • In order to effectively reach out to the masses, the planned publicity exercise entailed hire of organized and professional publicities team to make public announcements and deliver standard message on the content of the draft amendments across all Sub Counties, In addition, the publicity invited stakeholders to submit their memoranda in writing while observing the prescribed deadlines. • The Committee also availed a copy of the draft Finance Bill 2014 to the ICT Department for uploading to the Nakuru County Government Website.

18. FEEDBACK FROM THE PUBLICITY AND AWARENESS DRIVE • The committee has received considerable amount of inputs from the just concluded publicity and awareness drive. • Due to the technical nature of the amendments in the Finance Bill, The Bill has been greatly misinterpreted, e.g. the Matatu Association and the Nakuru County Private Medical Practitioners. • Going forward, it is the recommendation of the committee that the stakeholders/business associations be made to understand the amendments for correct interpretation.

19. FEEDBACK FROM THE PUBLICITY AND AWARENESS DRIVE • Some stakeholders have complained that they had not received information in time or had an opportunity to take a look at the Draft Finance Bill despite the committee having sent them copies through their respective business associations. • Further, the individual business association proposed that there be a stakeholders meeting with the committee before the actual public participation is done in order to build a consensus and goodwill from the business community. • The committee is hopeful that there will be much more responses across the board on the Draft Finance Bill 2014.

20. OTHER PLANNED ACTIVITIES • The committee is currently assessing the inputs submitted by the members of the public, the stakeholders and from the County Government departments on the Draft Bill. Therefore, the committee anticipates that: • The Compilation of all the feedback from the Publicity and Awareness Activities will be done on Friday 22nd August 2014. • Submission of the final Draft Bill 2014 to the County Executive will be done on Monday 25th August 2014.

21. OTHER PLANNED ACTIVITIES • To carry out a joint public participation with the County Assembly’s Budget and Appropriation Committee from Monday 1st September 2014 to Wednesday 10th September 2014.

23. CHALLENGES • This process has faced some challenges like: • Late submission of memoranda from members of the public, stakeholders also various county departments despite timely notification in the leading dailies (Nation, The People’s Daily and the Star newspapers) on the 29th and 30th May 2014. • Some County Government Departments were yet to submit proposals on the revision of the Finance act 2013 before the publicity of the draft bill.

24. CHALLENGES • Delayed implementation of the planned work activities due to lack of timely facilitation. • Misinterpretation of the technical amendments in the finance bill 2014.

26. CONCLUSION • Having gone through all the above steps in the formulation of the Draft Finance 2014, that is engaging the members of the public, the stakeholders, revenue officers and various County Government departments. It is the committee’s feeling that this draft bill is remarkably inclusive and takes into account the principles of equity, certainty and ease of revenue collection. • The Committee considered the impact of the proposed changes on development, investment, employment and economic growth.

27. CONCLUSION • The draft bill was shared with the National Treasury to ensure consistency with the National Government tax regime i.e. taking into account the domestic, regional and international tax trends. • The draft bill was also shared with the Commission for Revenue Allocation (CRA) as per Section 132 (3) (a) of the PFM Act 2012 and to ensure consistency with the Division of Revenue Act.

28. CONCLUSION • The committee is looking forward to the next phase of this program and hopes for cooperation from all quarters to ensure a successful process. • The committee envisages that the Draft Finance Bill 2014 will be accepted by the County Executive Committee and further be approved by the County Assembly to enable the County Government to meet its projected revenue potential.

29. DRAFT COPY OF COUNTY GOVERNMENT OF NAKURUFINANCE BILL, 2014

30. ARRANGEMENTS OF SECTIONS PART I – PRELIMINARY 1- Short title and commencement 2- Imposition revision of the taxes, fees etc. of the County 3- Directions, resolutions etc. under Principal Act 2013

31. ARRANGEMENTS OF SECTIONS PART II- TAXES, FEES AND CHARGES PAYABLE AND RATES APPLICABLE 4- Rates of Property – Tax 5- House Rent 6- Single Business Permit 7- Stock auction and slaughter fees 8- Agricultural produce Cess 9- Building plan approval

32. ARRANGEMENTS OF SECTIONS PART II- TAXES, FEES AND CHARGES PAYABLE AND RATES APPLICABLE 10- Royalties 11- Outdoor advertising 12- Market fees 13- County Parks fees 14- Health charges and fees 15- Parking fee

33. ARRANGEMENTS OF SECTIONS PART II- TAXES, FEES AND CHARGES PAYABLE AND RATES APPLICABLE 16- Education, social facilities and other related charges 17- Sale of documents 18- Fisheries licenses, cess and related charges 19- Forest produce cess 20- Liquor Licensing.

34. ARRANGEMENTS OF SECTIONS PART II- TAXES, FEES AND CHARGES PAYABLE AND RATES APPLICABLE 21- Conveyancing charges 22- Firefighting and disaster management 23- Hire of vehicles and plants. 24- Weights and Measures 25- Other Charges -e.g. Court Fines, Cash Bail Forfeited, Certified Copies.

35. ARRANGEMENTS OF SECTIONS PART III- WIDENING OF TAX BASE PART IV- MEASURES TO PREVENT NON REMITTANCE OF COLLECTED REVENUE PART V – TAX INCENTIVES AND RELIEFS PART VI- RATIONALIZATION OF INTER- COUNTY TAXATION PROVISION PART VII – GENERAL ANTI- EVASION RULE

36. ARRANGEMENTS OF SECTIONS SCHEDULES FIRST SCHEDULE FEES AND CHARGES SECOND SCHEDULE SINGLE BUSINESS PERMIT THIRD SCHEDULE TOURISM CHARGES FOURTH SCHEDULE MAXIMUM THRESHOLD OF AGRICULTURAL PRODUCE MEMORANDUM OF REASONS AND OBJECTS

37. THE COUNTY GOVERNMENT OF NAKURU FINANCE BILL, 2014 A bill for An Act of county assembly to impose and amend certain taxes, charges, fees and licenses and for matters incidental thereto, ENACTED by County Assembly of Nakuru, as follows- • This Act may be cited as the Nakuru County Government Finance Act 2014 and shall come into operation, or deemed to have come into operation as enacted by the County Assembly.

38. 1A. The Act shall be read as one with the Finance Act 2013 hereinafter referred to as the ‘Principal Act’. • Section 2 of the principal Act is amended by inserting the following immediately after the word activities and before the full stop; Fisheries Licenses, Cess and Related Charges , Licensing and Betting, Liquor Licensing, Conveyancing Charges, Firefighting and Disaster Management Charges, Hire of Vehicles and Plants among Other Charges.

39. Section 3 of the Principal Act is amended by deleting the whole section and inserting two new subsections as follows; • All matters relating to financial management including collection and administration of taxes, fees and charges and other levies, shall be governed by the Principal Act with modifications from time to time as shall be provided in the various county legislations and regulations that shall be enacted.

40. Sub Section (1) does not apply to specific respective amounts payable in respect of the taxes fees and charges or other levies, and in that regard, the amount shall be as provided in the “New” Charges column in the schedule.

41. PART II – AMENDMENT OF TAXES, FEES AND CHARGES PAYABLE AND RATES APPLICABLE Part II of Principal Act is amended by inserting the following new sections. 4. Fisheries Licenses and related charges In respect of specified fishing activities and produce, for the assessment year 2014-2015, the rates of fees as specified in Part II of the First Schedule of the Act.

42. 5. Licensing and betting charges In respect of levying licensing fee and betting charges, assessment for the year 2014-2015, rates of charges have been specified in Part XIII of the First Schedule. 6. Liquor License In respect of levying licensing fee for liquor and related charges, assessment for the year 2014-2015, rates of charges have been specified in part XIII of the First Schedule.

43. 7. Conveyancing charges In respect of charges pertaining to conveyancing matters relating to county property, assessment of charges for the year 2014-2015 as specified in part VII in the First Schedule. 8. Firefighting and disaster management In respect of levying charges relating to services of firefighting and disaster management in the county, assessment of charges for year 2014-2015 as specified in part XI of the First Schedule.

44. 9. Hire of Vehicles and Plants In respect of levying charges relating to hiring of vehicles and plants from the County Government, assessment of charges for year 2014-2015 as specified in part XI of the First Schedule. 10. Introduction of Weights and Measures In respect of levying charges relating to weights and measures from the County Government, assessment of charges for year 2014-2015 as specified in part XIII of the First Schedule.

45. 11. Other charges Other charges relating to but not limited to court fines , cash bail forfeited, search fee, procuring of county technical experts to attend court or make a report, supply of certified county records etc., assessment for year 2014-2015, rates have been specified in part I of the First Schedule.. Amendments in this part shall take effect immediately after enactment by County Assembly.

46. 12. The First Schedule to the Principal Finance Act is amended in the manner specified in the schedule to this Act. 13. The Second Schedule to the Principal Finance Act is amended in the manner specified in the schedule to this Act.

47. PART IV- AMENDMENT OF MEASURES TO PREVENT NON REMITTANCE OF COLLECTED REVENUE This part is amended by inserting a new paragraph no. Viii to read as; Viii. Use of Mobile Cash Transfer and through Bank Agents.

48. PART VIII- AMENDMENT OF GENERAL ANTI -EVASION RULE This part is amended by inserting one new paragraphs vii to read as follows; vii. Categorizing businesses e.g. small, medium and large respectively.

49. FIRST SCHEDULE

50. FIRST SCHEDULE