Through their finance Bills, 16 counties on the Northern Corridor have proposed introduction of levies on cargo passing through their territories to boost internal revenues. These include Mombasa, Makueni, Taita Taveta, Machakos, Nairobi, Nakuru, Uasin Gishu and Bungoma counties.

“It has been brought to our attention that various counties along the Northern Corridor have formulated Finance Bills intended to raise funds under various heads,” Kenya Maritime Authority director-general Nancy Karigithu said in the letter dated October 2.

She said the levies were illegal, adding they could impede trade in the region. Mombasa has sought to introduce transit charges and branding fees on trucks.

For shipping lines, Mombasa’s Finance Bill proposes an export permit fee, import clearance fee, fumigation fee and supervision and destruction fee for condemned cargo each at $20 (Sh1,780) per tonne.

High fees

The county also proposes to charge $60 (Sh5,340) per ship for inspection and for spraying vessels against vectors, including a transport infrastructure development levy of $2 (Sh178) per tonne of cargo handled at the port. Industry players say the charges could impact negatively on competitiveness of the Mombasa port, which already has high handling fees.

The facility has faced stiff competition from the Dar port, which is currently undergoing expansion.

“While the Constitution accords the county governments the revenue raising powers, where the county legislation is in conflict with the national legislation on matters of economic policy, national security and economic unity and in protection of common markets in respect of goods, services, capital and labour, then the national legislation shall prevail,” Ms Karigithu argues in her letter.

The second seaport being built at Lamu is expected to get its life from the goodwill that traders attach to the Mombasa facility. Gilbert Lang’at, CEO of Shippers Council of Eastern Africa (SCEA), said charges proposed by Mombasa and the 15 other counties would amount to double taxation and would scare away importers, resulting in lower cargo volumes at the port.

Last week, Kenya Ports Authority chairman Danson Mungatana said there had been no consultations over the levies, and wondered how the county could go ahead to introduce them.

“We are focused on essential strategies aimed at improving the port performance,” said Mr Mungatana. “When such discussions over new taxes begin to emerge, they derail these ambitious plans.”

Based on the 22.3 million tonnes of cargo handled by the port in 2013, he said, a charge of $20 on each tonne in transit would mean extra costs totaling $446 million a year.