By James Anyanzwa and Njiraini Muchira
By April 30, Treasury is supposed to present to Parliament budget estimates for the 2012/13 financial year in accordance with the new Constitution. With the deadline approaching in five weeks, bureaucrats at Treasury face another equally ominous headache after Parliament frustrated efforts to pass the 2011/12 Finance Bill over the interest rates standoff.
But even as acting Finance minister Njeru Githae put on a brave face last week during a meeting with MPs and bankers: maintaining there is no cause for worry, panic is rife in the Treasury over tax collection.
Since January, the Government has been collecting illegal tax from companies that were affected by tax adjustments contained in the2012/13 budget.
Though Githae is on record saying âthese taxesâ would be ratified as soon as the Bill is passed, tax experts contend that any legal challenge in courts by the affected companies could see the Government slapped with a huge bill of refunding illegal taxes and possibilities of fines for taxes collected over the past three months.
Beer and cigarette makers were expected to get a tax reprieve since January first after Parliament delayed in passing the Finance Bill leaving the Treasury without authority to collect new taxes.
Most affected are supposed to be the âsin taxâ whose collection was overhauled to usher in single rates: meaning that beer and cigarette prices may be reduced until Parliament enacts the law.
Cigarette manufacturer British American Tobacco (BAT), which was among companies affected after the then Finance Minister Uhuru Kenyatta proposed to harmonise the excise duty regime for cigarettes at Sh1, 200 per mille or 35 per cent of the retail selling price is among companies affected.
"The Finance Bill has not been passed but we are paying tax based on the bill," said BAT Finance Director Philip Lopokoiyit.
The uncertainty and confusion that is now being generated by Parliamentâs hard stance is causing panic at Treasury because the delay is affecting the preparation of the 2012/13 budget.