Treasury accuses judges and magistrates of standing in the way of tax collection.
Ukur Yatani has played down protests over budget cuts for the Judiciary saying the country’s resources are limited and need to be prioritised.
In an interview with The Standard, Yatani reckoned that all government services are critical and therefore it would be inaccurate for Chief Justice David Maraga to claim that judicial services are more important than others.
It sets the stage for an escalation of tensions between the Executive and Judiciary whose budgets were slashed by Sh2.9 billion in the latest round of austerity measures unveiled by Treasury.
The acting CS instead accused judges and magistrates of standing in the way of tax collection by indifferently treating tax dispute suits before the courts without appreciating that the same taxes are the main source of government revenues.
“When we try to collect taxes, people run to the Judiciary to challenge the measures and are given orders stopping us,” he replied while apportioning part of the blame in revenue shortfalls to delayed cases before the courts.
Among the cases that are played out in courts for years is the planned excise taxes on bottled water and soft drinks, which was expected to generate annually Sh3.5 billion, according to Treasury’s projections.
Manufacturers have until next Wednesday to start affixing revenue stamps on these beverages after a court ruled in favour of the Kenya Revenue Authority in the suit filed two years ago.
While Yatani did not direct any reference to this suit in the interview, it is the perfect illustration of how slow conclusion of petitions takes to stand in the way of tax collections.
Yatani is expected to table in Parliament Supplementary Budget that would regularize proposed spending cuts for approval.
While likening the national budget to that of any household, he said there were competing needs for the limited resources and that everyone should wake to that reality.
“There is nothing that will happen to you if you don’t have three-course meals every time,” he said.
Foreign travel which was the main target of the budget cuts, he added, could consist of smaller delegations if absolutely necessary or having the number of days reduced.
Yatani spoke two days after Maraga claimed that the Judiciary was being undermined by the Executive with the budget cuts being the clearest indication.
He argued that several functions in the Judiciary have been disrupted, including the inability to administer special court sittings owing to lack of funds.
A court has already given interim orders stopping the Treasury CS from slashing the Judicial budget in a case filed by the Judicial Service Commission.
“Pending the hearing and determination of this case, an order is hereby issued restraining the National Treasury, its agents, officers or any persons from implementing a September 24 circular or issuing any unwarranted directive with the same effect on the judiciary’s budget,” said Justice Makau Mutua of the High Court.
It is not clear what the orders would mean given Yatani’s stand on the matter. He says Treasury’s action is informed by the reality that the country has all along been living beyond its means before his appointment after the suspension of his predecessor Henry Rotich.
He faulted Rotich’s approach to budget-making process which was informed by unrealistic revenue projections that forced the government on a borrowing spree to plug the funding hole. Some projects were abandoned midway for lack of resources.
Rotich’s budgets had huge funding gaps and borrow more than Sh600 billion to meet spendings.
Yatani who is the former Governor of Marsabit, said he has no immediate plans for mega borrowing, only indicating that his priority was actually to retire expensive loans, including the Eurobonds as part of his debt restructuring drive.
Such loans issued on friendly terms are often granted by the World Bank, International Monetary Fund and partner countries.
But at the current level of indebtness, many lenders would be unwilling to grant more loans to Kenya on fears that it might be unable to repay.
Yatani acknowledged that while the economy has been growing steadily over the last five years, the trickle-down to the ordinary man has been minimal, admitting that “things could be a lot better.”