Kenya: Mombasa Hoteliers Welcome Court Ruling on Double Taxation

5 October 2020

Hoteliers in Mombasa County have welcomed a court decision to quash the County Finance Bill 2019/2020, which they say is retrogressive and unlawful.

In the Bill, the county had increased rates of transit fees, single business permits, land rates, liquor licences, hotel and bed levies. It also increased parking fees, which business owners claimed was exaggerated.

Higher liquor charges were a particular pain for hotel, bar and restaurant owners in the tourist city, who claimed no public participation took place before the new rates were set.

According to the Kenya Coast Tourist Association (KCTA) Chairman Victor Shitakha, the ruling by the court is a relief to industry stakeholders.

Already burdened

"This is excellent for the hotel industry. Hoteliers were already burdened with levies because of the effects of coronavirus," he said, adding that the county should have taken the current poor state of the economy into account before proposing to increase the levies.

The ruling, however, is a blow to the county government, which is supposed to raise revenue from businesses to run county projects and offer services to the people.

For several months, hotels in Mombasa were closed for lack of business as a result of the Covid-19 pandemic, after the government restricted movements between counties.

Mr Shitakha, who is also the Pride Inn Group Coast regional general manager, hoped that the county would hold or reduce all the hotel licences until next year, when the businesses will be in recovery.

Mombasa Bar and Restaurants Owners Association Chairman Patrick Kabundu, who took the matter to court, said the ruling showed that what the county had done was unconstitutional.

He said from the ruling, business owners who had not paid their licences should not do so until next year.

Public participation

He urged the county government to consider public participation before coming up with laws.

"A lot of money was being asked from us when the economy was bad. The licences were also hiked for parking and tuktuks. This (court ruling) is the right decision," he said.

Hotel owners in Mombasa had said that the high taxes would result in double taxation since they pay the same to the national government.

As businesses reopen, many owners have complained of their inability to pay licences and taxes, and some of them have closed down.

When the county increased business permit charges, most business owners threatened to move to other counties that offer a friendly environment.

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