alexa Queries over legality of Rotich budget - Daily Nation

Queries over legality of Rotich budget

Friday June 14 2019

Kenya's Cabinet Secretary for Finance Henry Rotich.

Kenya's Cabinet Secretary for Finance Henry Rotich with his briefcase outside the Parliament Buildings on June 13, 2019 before going to read the 2019/2020 Budget. PHOTO | FRANCIS NDERITU | NATION MEDIA GROUP 

DAVID MWERE
By DAVID MWERE
More by this Author

The legality of the 2019/20 budget-making process may come to haunt the National Treasury after it emerged that it failed to comply with a High Court ruling of 2018.

The ruling by Justice Winfrida Okwany on September 19, 2018,made it mandatory that Treasury Cabinet Secretary (CS) must present both the budget estimates and Finance Bill to the National Assembly.

PETITION

However, when National Treasury Cabinet Secretary Mr Henry Rotich presented the Sh2.81trillion budget estimates in April this year, there was no Finance Bill.

The estimates would later be varied by the National Assembly Committee on Budget and Appropriations to Sh3.02 trillion.

The Public Finance Management(PFM) Act, which guides the current budget-making regime, provides that the estimates must be presented at least two months before the end of every financial year.

Advertisement

Justice Okwany ruled that the Finance Bill, which gives the government the legal force to collect taxes to finance its budget, must be enacted before the budget highlights and the revenue collection measures presented to the National Assembly.

The argument by the court in the petition filed by activist Okiya Omtatah was that the government ‘cannot budget for what it does not have or has not collected’.

As an effect of the ruling, the court nullified the Provisional Collection of Taxes and Duties Act of 2018,which the government through Kenya Revenue Authority, had been using to collect revenue pending the passing of the Finance Bill. “Any other parts or provisions thereof, including taxation, cannot be implemented before the Finance Bill becomes an Act,” Justice Okwany said of the Provisional Collection of Taxes and Duties Law.

APPEALED

The ruling had a great impact on the Value Added Tax and other sin taxes that have previously come into effect on the midnight of the day the budget highlights are presented by the Treasury CS.

The collection of revenue by the taxman was based on the fact that different sections and schedules of the Finance Act come into force on diverse dates - from July1, the start of every financial year and beyond. Though there was ample time for the Treasury to propose amendments to the PFM Act to comply with the court ruling, it failed to do so.

Interestingly, the Treasury never appealed, meaning the ruling is now part of the law.

On Thursday, Kitui Central MP Makali Mulu admitted that the budget-making process failed to comply with the court ruling.