Businesses have won a huge court battle after Base Resources overturned a ruling allowing Mombasa County to charge a Kes 3,000 levy on all its vehicles destined for the port.
Mombasa County had won cases at the High Court and Court of Appeal, which held the devolved unit has the power to levy taxes and charges for services, including road transport services.
The Supreme Court, however, has ruled that Mombasa County cannot charge levies on roads built by the national government.
The court led by Justice Philomena Mwilu said the Likoni-Ukunda Road A14 falls directly into the category of a national road; it is not a county road, and the cess imposed by the County Government of Mombasa was improperly imposed and not a charge for service as contemplated by Article 209 (4) of the Constitution of Kenya.
The ruling may set a precedent for other businesses which have been facing an overlap of levies and taxes from both the national and county governments.
It states that counties must demonstrate which services they are offering in exchange of taxes.
On the flip side counties will feel the hit since they have concentrated their taxation efforts on erecting toll stations on the highway targeting transport and logistics businesses with punitive taxes.
County governments hard pressed for cash have been expanding avenues for collecting extra home grown revenues due to delay in exchequer disbursements and growing internal expenses.
During the third quarter of the last financial year, county governments generated Kes 25.52 billion, which was 45.6 per cent of the annual target of Kes 56.02 billion according to reports by the Controller of Budget.