President William Ruto last night moved to avoid a legal minefield after presenting a memorandum to Parliament formally withdrawing the controversial Finance Bill, 2024 without which it will still become law after 14 days.
“I refuse to approve the 2024 Finance Bill, and refer the bill to be reconsidered by the National Assembly with the recommendation to delete all the clauses,” the President said in the memo, informing Parliament of the reservations about the proposed revenue. – raise the law.
Failure to refer the Bill, through which the government had hoped to raise Sh347 billion additional in tax revenue, will return to the National Assembly will automatically become law on July 15.
This could result in the withdrawal of the planned tax increase without notice.
“Within fourteen days after receiving the bill, the President shall approve the bill or refer the bill back to the Parliament for reconsideration by the Parliament by noting the reservations related to the President in the bill,” says Chapter 8 of the Constitution.
“If the President does not agree to the bill or refer it back within the specified time, or agree, the bill shall be deemed to have been approved at the expiration of that time.”
The Appropriations Act, which contains the government’s spending plan for the fiscal year, will go through a similar process, with the President recommending spending cuts to create a leaner budget.
It was also approved in the National Assembly on Tuesday.
Dr Ruto had earlier announced he would not sign the bill, which proposed several tax increases, a day after violent clashes between police and protesters across the country left at least 15 people dead and many injured.
He said he would now start a dialogue with Kenyan youth, without elaborating, and work on austerity measures – starting with cutting the presidential budget – to make a difference in the country’s finances.
Vice President Rigathi Gachagua also called on the youth to call off the protest to avoid loss of life and property damage and blamed the intelligence services for not giving proper advice to the President.
But some protesters said on social media that even if Dr Ruto stepped down, they would go ahead with their planned rally on Thursday.
The President’s memo shifts the focus back to parliamentarians who can also do the unthinkable and reject the withdrawal of the President’s Finance Bill if supported by 233 or two-thirds of the National Assembly.
Lawmakers have removed some tax increases from the final version of the Finance Bill on Tuesday, including bread, cars and cooking oil, but included others to prevent a budget gap.
The withdrawal of the tax hike marks a major victory for the youth-led protest movement that has grown from online condemnations of the tax hike to mass rallies demanding political reform, in the most serious crisis of Ruto’s two-year presidency.
The Treasury has warned of a Sh200 billion revenue shortfall in the possible rejection of the Finance Bill in its entirety.
This includes cuts that affect critical spending including school meals, payment of deferred bills, hiring medical interns and confirming teacher trainers to permanent terms and retirement and hiring teachers in junior high schools.
Treasury Cabinet Secretary Njuguna Ndung’u has advised lawmakers to approve the measures contained in the Finance Bill 2024, 2024 as proposed by the exchequer or risk a budget hole that will include a loss of Sh5 billion to the same share of revenue.
President Ruto on Thursday called for fresh spending cuts to cover revenue shortfalls, including allocations for offices and the Executive. “I immediately directed austerity measures to reduce expenditures, starting from the Executive Office of the President and extending to all government executives. I ordered that operational costs in the Presidency be reduced to eliminate allocations for secret ballots, reduce the budget for travel, hospitality and the purchase of motor vehicles, renovations and other costs,” he said.
He also proposed that Parliament, the Judiciary and the district government work together with the Treasury to implement budget cuts.
The government will continue to increase revenues from existing tax laws.
