Why Treasury CS holds key to proposed changes to Finance Bill

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

The National Treasury Cabinet Secretary (CS) Njuguna Ndung’u will have the final say on the kind of amendments lawmakers want effected on the Finance Bill, 2024, because of its ‘Money Bill’ implication on the country’s budget.

This comes as the Bill, which seeks to raise additional revenue on top of the projected Sh2.95 trillion to finance the Sh3.9 trillion budget for the 2024/25 financial year, is set for consideration at the committee of the whole House, from Wednesday morning.

The National Assembly Finance and National Planning Committee chaired by Molo MP Kuria Kimani has scheduled a meeting with Prof Ndung’u today (Monday) for his input on the members’ proposed amendments to the Bill.

The meeting is critical to determine whether the proposed amendments can be accommodated by the country’s fiscal space, meaning that those that cannot be accommodated will not see light of the day.

The meeting with the CS will be preceded by the committee’s harmonisation process on all the 35 proposed amendments on the Bill, that it had received by close of the deadline imposed by House Speaker Moses Wetang’ula of Friday last week.

The committee chairman did not respond to our inquiries but a member of the committee who did not want to go on record confirmed the meeting with the CS.

“This is a normal practice before a Finance Bill is enacted. We will therefore be meeting the National Treasury CS and his technical team to get their input on proposed amendments on the Bill,” the MP told Nation.

This means that only the proposed amendments ratified by the National Treasury and approved by the Speaker, will be included in the Order Paper for consideration by the House.

Speaker Wetang’ula gave a deadline of Friday 1pm for MPs desirous of amending the Finance Bill 2024 to file their proposals with the Office of the House’s Clerk for onward transmission to the Finance Committee for consideration.

The Speaker’s directive came after the controversial Bill sailed through the Second Reading on Thursday afternoon last week by a roll call vote at the division that saw 204 MPs support it against 115, with no abstention.

Why the input of the CS National Treasury is critical is the “Money Bill” implication.

Article 114 (3) of the Constitution defines a “Money Bill” as a Bill other than the Division of Revenue Bill and County Allocation of Revenue Bill, that contains provisions dealing with taxes.

The “Money Bill” also contains provisions on the imposition of charges on a public fund or the variation or repeal of any of those charges, the appropriation, receipt, custody, investment or issue of public money, raising or guaranteeing of any loan or its repayment.

“If, in the opinion of the Speaker, a motion makes provision for a matter listed in the definition of “a money Bill”, the House may proceed only in accordance with the recommendation of the relevant committee of the House, after taking into account the views of the CS responsible for finance,” the Article reads.

The committee, in its report to the House on Tuesday last week and preceded by a Kenya Kwanza Parliamentary Group meeting at State House on the material day, has recommended to amend the Bill to delete the contentious clause.

The committee wants the proposal to impose 16 percent VAT on bread deleted as it will escalate the price of the precious household commodity beyond the reach of a majority of Kenyans. The committee also proposes that the 25 percent Excise Duty on crude edible and refined oils be deleted to save Kenyans from the high cost of living.

The committee has also proposed the removal of the 16 percent VAT on edible oils. Whether the proposed changes will get to the floor of the House for consideration is what Kenyans will be waiting for.

The National Treasury has already warned that the committee’s proposed changes means that the country will forgo Sh200 billion, which it says has a serious implication to the financing of the country’s budget.

The National Treasury notes that to balance the budget, the government has no choice but to forgo some of its proposed expenditures.