President William Ruto is between a rock and a hard place over his tax bill even though he offered talks to protesters.
Kenyan youth, particularly those from Generation Z, have been leading protests against the proposed Finance Bill, 2024 through X space dubbed "Occupy Parliament."
The protesters demanded total withdrawal of the bill from the government or complete rejection by MPs so that they could get off the streets.
The Finance Bill, 2024 is expected to enter the Committee Stage on Tuesday when amendments will be considered and voted on a clause-by-clause basis by members of the National Assembly.
Ahead of the crucial vote, protesters are mobilising to hit the streets on Tuesday and until the MPs hold their final sitting on the Bill if it is not rejected at the Third Reading.
Ruto might only push for amendments already promised
Among the options that the president has is to ignore the protesters and only push for the amendments that his government already promised.
Last Tuesday, the President chaired a parliamentary group meeting of his Kenya Kwanza government at State House and announced a raft of concessions.
The Finance and National Planning Committee Chairperson Kimani Kuria announced he will move amendments to the Bill as presented by the National Treasury.
Some of the amendments include the repeal of the contentious 2.5 per cent motor vehicle circulation tax, value-added tax on bread and excise duty on edible oil after a public uproar.
The government proposed to pause a plan to give the Kenyan Revenue Authority unfettered access to people’s mobile money and banking details without a court warrant.
The president has the number in the National Assembly to easily have the amendments sail through when MPs meet in the committee stage on Tuesday.
The Bill was approved by MPs last Thursday at the Second Reading after they voted 204 to 115.
The Bill needs the support of a simple majority at all the stages including the crucial third reading level for final approval or rejection.
The President can defer the Bill
MPs can toss out the Bill by deferring or calling off its Third Reading after the committee stage through a simple majority vote.
Should the president decide to yield to public pressure, he can lobby MPs to take a vote after amendments to defer the Third Reading Stage.
The Kenya Law Reform Commission says deferring a Bill at the Third Reading stage is technically “killing the Bill” as it would take six months to reintroduce it.
The government can only reintroduce the Bill after six months with new provisions, which the Standing Orders say would be different from the submitted proposals.
If the MPs go this route, it would be the first time in the history of the country’s legislative process that a Bill of such kind is deferred.
The law allows the government to continue collecting revenue even if the Finance Bill, 2024 is deferred, but only based on the Finance Act 2023.
Renowned economist and Former Mandera Senator Billow Kerrow says if the Bill is deferred or rejected there will be no government shutdown.
He argued that the Finance Bill, 2024 is not for raising the 2024/25 government's estimated revenue of Sh 3.4 trillion, but it contains tax measures intended to raise an additional tax of Sh346 billion only.
“If the Bill is not passed, KRA will still collect the targeted Sh3.4 trillion less the 346 billion. It's misleading to tell Kenyans that there will be no money to run the government, build roads, etc. The government will not shut down," he said.
However, should the Finance Bill be rejected or deferred, then the government will be unable to legislate the Appropriation Act, of 2024.
Last year, the High Court ruled that revenue-raising measures must first be approved before the Appropriation Bill is introduced to the House.
The Appropriation Act guides government spending in the absence of the Finance Act.
In such a scenario, the government can access about half of the presently approved spending estimates.
Ruto can allow his troops to consider and pass new amendments
Another card on the table could be the president to whip his troops in Parliament to approve specific proposals by MPs representing dissatisfied Kenyans.
The opposition coalition, Azimio la Umoja, had asked its MPs to propose amendments to the Bill which they termed as punitive.
Last year, an attempt to frustrate the Finance Bill by Azimio flopped despite a spirited effort by Minority Leader Opiyo Wandayi-led MPs to block it.
"The tax proposals are punitive and we know all right-thinking leaders will not hesitate to reject them," Wandayi said.
One of the amendments that Azimio wants is to repeal the 10 per cent of clinkers used to make cement saying it is a tool for stagnation.
They also want the export promotion tax and the increase of the fuel levy by Sh9 per litre dropped from the Bill, as part of its bare minimum demands.
The President can decide to allow the opposition amendments to pass as a way to assuage public anger over the Finance Bill, 2024.
Ruto could abandon proposed tax measures in the Finance Bill, 2024
President Ruto might consider dropping the new tax measures that seek to raise additional revenue of Sh346 billion.
In this scenario, the government could go for borrowing to finance the budget hole and meet its spending plans.
The government could also opt for prudence and efficiency on non-essential expenditures while investing in maximising revenue generation within the current law.
The government has traditionally gone for new revenue measures to raise additional revenue to finance its budget