Government will not be able to surprise Kenyans with new taxes on Budget day.
The national budget will now be made public in the month of April following radical amendments to the Public Finance Management Bill that now require Treasury to table the estimates and the bill on taxes before June.
The Cabinet Secretary’s reading of the budget in June will merely be ceremonial, as Parliament will have gone through his wishlist and the Finance Bill, approving or turning down any new taxes beforehand.
National Treasury will be required to table the estimates and the bill on taxes after President Uhuru Kenyatta assented to an amendment in the Public Finance Management Bill.
“The Cabinet Secretary shall submit to the National Assembly, on or before April 30, the Finance Bill setting out the revenue-raising measures for the National Government,” the miscellaneous bill reads.
Parliament moved to amend the law following confusion on when new taxes are to be introduced since the Finance bill is read in June and Parliament takes up to September to discuss and approve new revenue-raising measures.
Bringing the Finance Bill to Budget day means the piece of legislation is delayed since that will be its First Reading.
Most of the changes to the taxation regime contained in the said Finance Bill are mere proposals and are subject to approval or rejection by Parliament.
Submitting the bill early will also address the glaring gap between the budget and Kenya’s ability to fund it.
By April this year, Kenya Revenue Authority collected Sh1.2 trillion against a target of Sh1.6 trillion for the financial year ending June 30 - meaning tax collection was at 76 per cent with one month to the end of the year.
Treasury will have to come up with an achievable budget or institute reasonable tax measures if it wants to put cash in big projects.
The bill also waters down the role of Treasury to that of planning and making proposals rather than having the power to change the prices of goods and services overnight as it had been under the old constitution.
Last year, Treasury Cabinet Secretary Henry Rotich tried to reclaim the glory days when the Executive could hold its cards close to its chest and unleash new taxes on Budget day that would spin the market, trying to absorb and adjust to the Finance Bill.
He wrote a piece of legislation, the Provisional Collection of Taxes and Duties Act, allowing him to impose taxes even before Parliament had a chance to look at his proposals.
According to the schedules of the Finance Act, sections came into effect on different dates from July 1, October 1 in 2018 and January 2019.
However, activist Okiya Omtata went to court and Justice Winfrida Okwany ruled that a Bill cannot be implemented until it is processed to be an Act of Parliament.
“The ruling will definitely have an effect on how the budget reading process is done,” Kunal Ajmera Chief Operating Officer Grant Thornton said.