Finance Bill 2024 pain and what State must now do

Njuguna Ndung'u

 Treasury Cabinet Secretary Prof Njuguna Ndung'u displays the Budget briefcase ahead of his speech in parliament in Nairobi, Kenya.

Photo credit: File | Nation Media Group

I have gone through the Kenya Finance Bill 2024 severally and have also watched and read analyses in the media. I have also gone to industry forums to listen to their views and arguments on this Bill. What I have seen signals gloom ahead.

Being a finance expert, I delved into the numbers, which seek to balance the needs of the nation, including debt servicing, and the recurrent and development expenditures. I see serious challenges.

Without adequate taxation, the government will be forced to borrow heavily to finance the budget. At the same time, heavy taxation may lead to less-than-expected taxes, closure of businesses, rising unemployment and other adverse effects.

Heavy borrowing will still trigger higher taxes in the near future as these debts have to be repaid. At the same time, external lenders such as the IMF and World Bank will still demand stringent measures to be implemented in the economy. Borrowing through Eurobonds or other bonds is quite costly at present rates. Domestic borrowing could trigger high bank borrowing rates for individuals and businesses and thus stifle growth in the private sector.

Widening the tax net to target those with money but pay nothing or less than the requisite taxes is the first of efforts to increase tax collection. It is not productive to keep targeting only the easy to tax such as those earning salaries or formalised businesses. It also does not help if the poor are to bear the heaviest of the tax burden. How do we keep forgetting that we were to liberate the hustlers?

The second and important measure is to aggressively fight and curtail corruption. Graft is the biggest problem that Kenya has. If we go by the numerous audit reports on government agencies, there is a lot that is lost each year from the national and county governments. Yet these reports don’t tell it all; former President Uhuru Kenyatta at one time said that the government loses billions of Kenya shillings each day through corruption. We have to stop corruption otherwise all else will be futile.

The third measure is to curtail wastage in government. So long as we have heavy wastage, even with all the other measures, we will remain in a hole because we would be simply taxing to waste.

Lastly, we have to reduce spending, especially of a recurrent nature. Spending has to be targeted; for what is absolutely necessary and largely good for the country. Even on development spending, we have to get value for money in each contract. What the government is going through is similar to a business trying to survive financial challenges; besides pushing to make more sales it has to cut down on expenses and ensure value for money in every expenditure.

If there is a time the government has to strengthen anti-corruption measures and institutions, it is now. If it does not, the nation’s implosion is nigh. It is time for Kenyans to ensure that government institutions work properly for them.

There is no stopping the politics about the state of the economy until the next general election. Wananchi are now woke and hurting.

Mr Mwirigi is a political and economic commentator. [email protected]