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Changed times: Why CS's statement is unlikely to shock you today

By Macharia Kamau | June 11th 2020 at 07:45:00 GMT +0300

National Treasury Cabinet Secretary Ukur Yatani. He will deliver his first budget statement today. [File]

Two decades ago this week was always a tense one for consumers.

The days, and at times weeks, leading to the budget day were marked with speculation on what would change after the Finance Minister presented the Government’s spending and revenue raising plans for the following financial year.

Traders would hoard essential products and shopping during the budget season could prove frustrating. As such things as sugar, flour, cooking oil and kerosene were in many instances always in short supply.

The artificial shortages were created by the traders in the hope that the Treasury would raise prices of the goods in new tax measures and that they would sell them at higher prices after the budget was read.

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Price increase

The traders would not even wait for the new taxes to take effect on the prescribed dates - they raised prices immediately.

This is no longer the case as the National Treasury Cabinet Secretary no longer holds the cards close to his chest. With the new Constitution, Treasury is required to make public its spending plans two months before the end of the financial year.

In a recent ruling, the High Court directed Treasury to be publishing the Finance Bill earlier so that it can be debated in Parliament and assented to before the commencement of the financial year on July 1. The Finance Bill mostly contains new tax measures that the government employs in the following financial year to try and raise more money to meet its spending.

Thus, Treasury CS Ukur Yatani is unlikely to shock you later today when he presents his Budget Statement in Parliament.

Last year, in a case filed by activist Okiya Omtatah, the High Court ruled that the Finance Bill must be tabled in Parliament at least two months before the start of the following financial year. In the case, Omtatah challenged Treasury’s move to start collecting new taxes before the Finance Bill is passed by Parliament.

The ministry then relied on the Provisional Collection of Taxes and Duties of 1959 which gave the CS Treasury powers to temporarily amend the national tax revenue statutes through a Finance Bill without having it first go through the legislative process. The court ruled that the Act was unconstitutional.

Government calendar

“The Finance Bill 2020 was tabled in the National Assembly for debate and approval on May 6, 2020. This is a departure from previous years where Finance Bills would be introduced to the National Assembly after the reading of the national budget in June," said audit firm KPMG.

“This will allow the National Assembly to approve the Bill in time for implementation of the tax measures when the Government calendar starts on July 1, effectively allowing the Government to match revenue collection and expenditure for the year.”

Audit and consultancy firm RSM also noted that publishing the Bill earlier would ensure the proposed changes to VAT and Excise Tax adjustments can become effective by July 1”.

Budget Ukur Yatani Economy Finance Bill
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