Kenyans have four days to give Treasury views on taxation, debt management

The National Treasury in September sought views from Kenyans on governing public finance. [File, Standard]

Kenyans have four days to give the National Treasury Cabinet Secretary John Mbadi their views on how they would like the Ministry to manage the country’s financial situation going forward.

The Treasury in September sought views from Kenyans on governing of the country’s public finance.

This was in a bid to thwart a repeat of the scenes that were experienced in May and June 2024 when Kenyans rejected the tax measures the government had proposed in the Finance Bill 2024. 

Different groups including departments within national and county governments, private sector players, professional bodies and civil societies as well as individual Kenyans have been giving their views in the process that is set to close on October 4. 

Among the areas where the Treasury is seeking Kenyans’ views include the legislative measures that the government can put in place to fund county governments in instances where the Division of Revenue Bill and the County Allocation of Revenue Bill are not enacted by June 30 of every financial year. 

This, the Treasury notes, would “prevent cash crises that could arise and affect the delivery of services by county governments”.

The Treasury is also looking for ways to finance public projects without having to increase its borrowing. Kenya’s public debt, which is now seen as unsustainable, stood at Sh10.56 trillion as of June this year.

“The National Treasury hereby invites the members of the public… to make submissions on… legislative and administrative reforms to improve the social and economic well-being of all Kenyans taking into account the current debt situation and the need for a sustainable public debt position without putting more burden on Kenyans,” said the Treasury. 

Following the rejection of the Finance Bill, the government noted that it would have to contend with a Sh344 billion tax revenue gap, which would necessitate further borrowing.

In the first Supplementary Budget, the Treasury increased the fiscal deficit to Sh761 billion from the earlier Sh597 billion when it had factored in the revenues that it would get from measures proposed in the Finance Bill. 

In borrowing more, the government may have to grapple with higher interest rates considering factors such as the downgrade of Kenya’s rating by Moodys, the global rating agency, in early July following the withdrawal of the Finance Bill 2024. 

Mbadi in seeking views from Kenyans also said he would be looking at suggestions that would “ensure equity and fairness in taxation, provide tax amnesty where justified and rationalise expenditures that erode revenue that would otherwise be used for implementation of projects that would improve the welfare of all Kenyans”.

The views of different taxpayers would also inform reforms on tax administration and compliance, ensuring all taxpayers pay their rightful share of tax while reducing tax evasion.

The Treasury will consolidate the views of Kenyans and draft bills to amend the current tax regime.

“The proposals received in the areas listed above will inform reforms to be undertaken in revenue administration and review of legislation by the National Treasury to foster inclusive economic growth for the welfare of all Kenyans for submission to Parliament,” said Treasury in the notice. 

Mbadi, who has for years taken on the government for imposing punitive tax measures on Kenyans, had earlier on assuming office noted that not all elements of the Finance Bill 2024 were bad, the challenge was that Kenyans were not consulted. 

“The problem we had was that the public felt they were not listened to,” he said.