18/05/2022
An Independent Analysis:
Sometime just prior to 2014, the business community, primarily through the BCCI began to lobby for something to be done to improve the Trade License regime given that it was clear that no standard and predictable way of determining the value of Trade License levied on businesses operating within municipalities was the norm.
The general perception was that it was an ad HOC and subjective system highly influence by political connections.
In 2014, the request began gaining traction with the Ministry of Local Government actively exploring options. The EDC led the coordination efforts in close conjunction with the BCCI and by 2016 had gone through various iterations which Cabinet at the time had reservations with for the reason that municipalities stood to be negatively impacted revenue-wise. They responded by requesting that the process go back to the drawing board to find a revenue-neutral solution.
In 2017, the EDC secured funding for technical assistance from the IDB to hire an international expert to provide guidance. The consultant came up with a method for standardizing the calculation of Annual Rental Value (and trade license) which was deemed acceptable. Cabinet approved in principle provided that stakeholder consultations with the private sector were conducted and provided that by running the numbers, the proposed reform would be revenue-neutral. The BCCI also supported the proposal in principle provided that the full details of how it would work were forthcoming. By that time, the Mayors Association and all municipalities were fully on board because the proposed methodology made administration easier, cost-effective and ensured a predictable (and unaffected) revenue stream. The Ministry proceeded to undertake a national data collection exercise to map the productive space of every businesses operative within municipalities country-wide, along with stakeholder sensitization. And by mid-2018 have completed the data analysis and submitted back to Cabinet who again agreed in principle, but requested additional stakeholder engagement with specific large firms such as the Bowen and Benny’s groups for their feedback. General endorsement in principle was reported to Cabinet with the Ministry requesting a decision in order to be able to catch on to the upcoming Trade License renewal cycle. This was followed up on until mid/late 2019 but by that time Cabinet was becoming increasingly sensitive to potential politically critical decision making vis-a-vis raising perceived increases in taxation (cost of doing business) and decided to not do anything.
Thereafter, the pandemic stalled any defision-making until the new administration came in and recognized the need to deliver on a long-overdue reform, the proposal and structure of which already advanced and ready to move forward.
Note, the inclusion of villages in the Trade License reform was not originally contemplated. It had been discussed to include some large/high value villages as a later stage action, but not together with the main reform. Nevertheless, with the reactivation of interest in delivering the reform, and in an effort to enable villages to have resources to better serve their communities, the Ministry decided to include it in one go in the draft bill.
