MPs to debate Uhuru’s stimulus package in Covid-19 battle

Monday March 30 2020
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National Assembly in session. MPs must meet to ratify President Kenyatta's socio-economic proposals following Covid-19 outbreak. PHOTO | FILE | NATION MEDIA GROUP

By DAVID MWERE
By IBRAHIM ORUKO

Lawmakers are expected back to Parliament this week to give President Uhuru Kenyatta’s stimulus package legal backing.

They will also discuss other proposals being floated by MPs to keep the economy humming amid the coronavirus pandemic.

The proposals include additional tax breaks and authorisation of MPs to use emergency funds under the National Government-Constituency Development Fund.

Whereas senators will have a sitting on Tuesday, the plans of the National Assembly were not clear by end of Friday even as the Sunday Nation learnt that the House Business Committee (HBC), which schedules business, had voted to hold a special sitting on April 7 in light of the measures announced by the President.

Tracking coronavirus

Even then, the possibility of the National Assembly having a sitting on Tuesday were remote as Speaker Justin Muturi had not published a notice in the Kenya Gazette as is required by the rules of the House, lending credence to the April 7 date.

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Both Houses of Parliament suspended their sittings on March 17 and voted to adjourn for a month in a move the MPs argued was meant to lend support to the government’s war on the disease that has placed the whole world in a standstill.

BIPARTISAN APPROACH

The Senate had voted to hold a special sitting on March 31 and Speaker Kenneth Lusaka said on Friday the House is ready to offer any necessary legal and policy support to the taxation measures announced by the president on Wednesday.

“It is the National Treasury that must initiate such interventions and, as a House, we are ready to lead the process to ensure that the president’s proposals are anchored in law,” Mr Lusaka said.

And while Treasury should initiate the process, the intervention of Parliament in the president’s taxation proposals cannot be gainsaid, especially on the economic stimulus package announced to cushion Kenyans against the effects of the Covid-19 pandemic.

The Senate has planned a motion to debate the president’s stimulus package and hopes to come up with a comprehensive resolution on the legal and policy interventions that are necessary to cushion counties from the ravages of the disease.

Besides introducing the Division of Revenue Bill, 2020, the Sunday Nation has learnt that senators will be pushing for the establishment of a joint committee bringing together lawmakers from the two Houses to develop a more comprehensive response to the crisis.

Confirming the move, Senate Minority Whip Mutula Kilonzo Junior said in the current crisis, a bipartisan approach is the best way out.

“The anticipated disaster response and the effect to the economy will also affect counties. We believe a joint committee of the Houses will have a comprehensive impact against this disease,” he said.

TAX BREAKS

The Senate also wants the legislative interventions arising from the president’s proposals implemented through an omnibus bill, which it argues will be faster than the amendment to individual laws, which could take time.

“The best way to do it will be through an omnibus bill that will carry all possible amendments together,” Kilonzo Junior said.

A day after the president’s announcement, National Treasury Cabinet Secretary Ukur Yatani published a gazette notice reducing value added tax (VAT) from 16 per cent to 14 per cent, among other tax breaks, in line with the president’s order.

The notice, which will come into effect on April 1, also has an additional regulatory intervention that will require the input of Parliament.

The VAT Act empowers the National Treasury Cabinet secretary to gazette changes of not more than 25 per cent of the existing rate to support the implementation of the VAT payments.

The Act further mandates the ministry to draft regulations and submit them to the National Assembly within 20 days.

Section 6 (1) of the VAT Act provides that the Cabinet Secretary in charge of Treasury may amend the rate of tax by order published in the Gazette by increasing or decreasing any of the rates of tax by an amount not exceeding 25 per cent of the rate.

“Every order made under subsection (1) shall be laid before the National Assembly without unreasonable delay,” reads Section (2) of the VAT Act.

RECALL HOUSE

Once introduced as regulations, they will be committed to the Committee on Delegated Legislation, which has power to consider all regulations drafted by Cabinet secretaries.

The committee, chaired by Uasin Gishu woman representative Gladys Shollei, will then prepare a report on the regulations and table the same in the House without proposing amendments.

National Assembly Minority Leader John Mbadi has supported the measures announced by the president.

Besides the stimulus package, MPs will have to consider the report of the nominees to the Teachers Service Commission (TSC) before April 7.

Mr Mbadi, however, cautioned Mr Yatani not to remove the exemptions as provided for under the Act.

“The CS is sufficiently empowered by the law to publish the gazette he did. It is the reason his notice did not touch on Income Tax Act, among others, as they require substantive amendments by the House,” Mr Mbadi says.

“But my worry is that even as the CS reduces the VAT, my gut feeling tells me that he may remove all the exemptions on the essential products that were zero-rated by the Finance Act of 2019,” he adds.

Already, Belgut MP Nelson Koech has written to Leader of Majority in the National Assembly Aden Duale, requesting him to petition Mr Muturi to recall the MPs to consider the President’s tax breaks.

AMENDMENT BILL

In his March 25, 2020 letter, the MP quotes Standing Order 29 (1) of the National Assembly, which provides that the Speaker may, on the request of the Leader of Majority or the Leader of the Minority, appoint a day for a special sitting of the House.

MPs Makali Mulu (Kitui Central) and Godfrey Osotsi (nominated), on the other hand, say that the Finance Act of 2019 will have to be relooked at through substantial amendments as proposed by the National Treasury to effect the president’s pronouncements.

“The Treasury should be submitting an amendment bill to the House as soon as possible. This may trigger the convening of the National Assembly, depending on the urgency of the matter, or await the official opening of the House on April 14. Any other way to effect the presidential directions will be an illegality,” says Mr Mulu.

According to Mr Osotsi, “Only Parliament has the power to amend taxation laws after public participation.”

Mr Osotsi’s argument is informed by the court ruling invalidating the collection of taxes through a provisional collection order issued by the National Treasury in a case that was filed by activist Okiya Omtatah.

The president also directed that the National Treasury implements immediate reliefs and increase disposable income to the people of Kenya through 100 per cent tax relief for persons earning a gross monthly income of up to Sh24,000.

SAFETY MEASURES

There is also a reduction of income tax rate (pay-as-you-earn) from 30 per cent to 25 per cent, reduction of resident income tax (corporation tax) from 30 per cent to 25 per cent and a reduction of the turnover tax rate from the current three per cent to one per cent for all micro, small and medium enterprises (SMEs).

Unlike the VAT Act, these changes require substantive amendments to the respective laws.

There was also the appropriation of an additional Sh10 billion to be effected by the National Assembly.

But it is obvious that the two Houses cannot achieve social-distancing as required by the World Health Organisation to curb the spread of the disease.

Social-distancing implies that legislators must sit a metre apart. “We will announce appropriate measures in terms of social-distancing in the chamber,” Mr Muturi said, adding that there has been intense fumigation in the debating chamber, the committee rooms and offices.

Mr Duale said the Covid-19 disease is a threat to the global economy, with countries being put on lockdown and that the package should cushion the SMEs and stimulate economic growth.