- Treasury has started the budget process for the next financial year 2025-26
- The last budget cycle suffered a hitch after Kenyans shot down the attendant tax proposals in the now famed Gen Z protests
Image: PCS
After Kenyans vehemently rejected the Finance Bill 2024 which culminated in the storming of Parliament, President William Ruto’s team has devised a new strategy to avert chaos.
The National Treasury has in this regard asked Kenyans to present views on the law changes that would pull the country out of the current economic strife.
Treasury has started the budget process for the next financial year 2025-26.
The last budget cycle suffered a hitch after Kenyans shot down the attendant tax proposals in the now famed Gen Z protests.
Ruto’s administration wants views from members of the public, the national and county governments, NGOs, civil societies, professional bodies, private sector players, religious groups and other stakeholders.
Treasury CS John Mbadi wants proposals on how to fund county governments when laws authorising the release of cash are yet to be enacted.
In the call, Treasury wants a proposed law to help prevent cash crises that could arise and affect the delivery of services by county governments when the Division of Revenue Bill and County Allocation of Revenue Bill are not enacted by June 30.
“The proposals will inform reforms to be undertaken in revenue administration and review of legislations by the National Treasury to foster inclusive economic growth for the welfare of all Kenyans for submission to Parliament,” the CS said.
Mbadi also wants suggestions on legislative and administrative reforms to improve the social and economic well-being of Kenyans.
“This is taking into account the current debt situation and the need for a sustainable public debt position without putting more burdens on Kenyans,” he said in a public notice.
The government further wants Kenyans to give views on legislation that would ensure equity and fairness and taxation, provide tax amnesty where justified and cut down tax expenditures.
“The hard copy of the proposals should be submitted to the undersigned or a soft copy sent through the email [email protected] not later than October 4, 2024.”
The idea, as per the notice, is to deal with tax costs that “erode revenue that would otherwise be used for implementation of projects that improve the welfare of all Kenyans”.
Mbadi has also invited proposals on how to reform tax administration to enhance collection and compliance with tax obligations.
“…so as to ensure each taxpayer pays the rightful share of tax through reducing tax evasion and avoidance,” the notice reads in part.
President Ruto’s team suffered a setback after the Finance Bill flopped, taking with it over Sh340 billion in projected revenues.
This worsened the budget deficit, causing state entities to suffer funding cuts, hampering key projects and government interventions.
Counties are yet to receive this financial year’s allocations following the delayed passage of the Division of Revenue Bill, 2024.
The government wants to take up the views to beat hurdles cited by judges in numerous cases challenging proposed taxes.
Mbadi cited provisions of the law which require the involvement of the people in the process of policymaking.
Section 35(2) of the Public Finance Management Act (Cap. 412A) requires participation by the public in the budget process.
The government was cognisant of the “burdens and benefits of the use of resources, raising revenue and managing expenditure equitably”.
“Article 201(a) of the Constitution on the principles of public finance requires that there should be openness and accountability, including public participation, in financial matters,” the CS said.
The issue of what should be considered sufficient and satisfactory public participation in a legislative process took centre stage during the hearing of the 2023 Finance Act appeal last week.
Busia Senator Okiya Omtatah and others used the grounds to persuade the Supreme Court judges on why the Act must fall.
They argued that Parliament was obligated to give reasons for adopting or rejecting proposals received by members during the public participation process.
The Court of Appeal, in a ruling delivered on July 31, imposed a wide scope of public participation when it nullified the tax law.