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The country will operate under the 2023 Finance Bill after President William Ruto announced the withdrawal of tax measures that sparked deadly protests.
The Finance Bill 2024 will now be sent back to the National Assembly with a memorandum detailing the reasons for refusing to assent to the Bill to become law.
The Majority Leader will then introduce a motion seeking the House’s concurrence with the President’s proposal under the Rules of Procedure.
We will pass a resolution to withdraw the bill in its entirety.
Kenya’s Kwanza government is trying to raise nearly Sh200 billion in additional revenue through the 2024 Finance Bill to finance its projects.
The government has submitted a Sh3.99 trillion budget for the 2024-25 fiscal year to Parliament.
The law allows the government to continue collecting revenue under the already implemented 2023 Finance Bill.
Prominent economist and former Mandela senator Bilo Kro said the government would not shut down if the bill was withdrawn.
He argued that the 2024 Finance Bill was not designed to increase the government’s projected revenue of Sh3.4 trillion in 2024/25, but the tax measures contained in it were only intended to raise additional tax revenue of Sh346 billion.
“If the bill is not passed, the Kenya Revenue Authority will still collect the target amount of Sh3.4 trillion minus Sh346 billion. It is misleading to tell Kenyans that there will be no money to run the government, build roads and so on. The government will not shut down,” he said.
Given that the Finance Bill 2024 has been withdrawn, the government will continue to use the Appropriation Bill 2023 to obtain funds to pay for expenditure.
Lawmakers on Tuesday passed the Appropriation Bill 2024 and the Finance Bill 2024, which are now awaiting the president’s assent.
Last year, the high court ruled that measures to raise revenue must first be approved before appropriations bills go to the House.
In the absence of a Finance Bill, the Appropriation Bill will guide government spending.
In this case, the government has access to currently approved expenditure estimates.
On Wednesday, President Ruto said he withdrew the controversial 2024 Finance Bill after listening to the people.
“After reflecting on the discussions on the contents of the Finance Bill and listening carefully to those who have loudly stated that they want nothing to do with the 2024 Finance Bill, I acknowledge that I will not sign the Bill and it will be withdrawn,” Ruto said.
The government will have to cut budgets in key sectors and enact radical policy shifts to bring the budget in line with revenue forecasts.
India’s finance ministry wrote to the National Assembly last week, warning of deep budget cuts if the 2024 Finance Bill is not enacted.
The National Assembly had proposed to cut Sh178 billion from the 2024/2025 fiscal year budget in response to the inability of Parliament to pass the 2024 Finance Bill for rationalization.
The judiciary will now undergo Sh2 billion of recurrent budget rationalisation, while the Office of the President will see its operating budget cut by Sh451 million.
The budget for the operation and maintenance of the presidential palace will also be cut by Sh500 million, while the recurrent budget of parliament will also be cut by Sh2.7 billion.
Parliament’s development budget will be cut by Sh450 million.
The confirmation and employment of junior secondary school (JSS) teachers will be reduced by Sh18.9 billion, cash transfers will be reduced by Sh5.5 billion and the NG-CDF will lose Sh15 billion.
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