The government will have to slash budgets for crucial departments if MPs do not endorse the revenue-raising measures contained in the Finance Bill 2024, the Treasury told Parliament in a letter yesterday.
In the letter seen by The Kenyan Wall Street, the Treasury wrote that the removal of various proposals would cause a revenue shortfall of about KSh. 200 billion in the next fiscal year. With revenue targets missed, the executive will need to realign its expenditure and reduce allocations to certain government departments which is likely to hike pending bills. Some of the entities that will face budget cuts include the State Departments of Internal Security, Foreign Affairs, TVETs, Northern Corridor Development, and Higher Education and Research.
“However, if the revenue-raising measures in the Finance Bill 2024 are not approved by the National Assembly, there will likely be a shortfall of KShs. 200bn,” Prof Njuguna Ndung’u, the Cabinet Secretary for the National Treasury, said in the letter. He proposed budget cuts across the three arms of government, reversing proposed additions and new budget lines in the Appropriations Bill, which sets how the government plans to use money for the next fiscal year.
Why it Matters for the Finance Bill
Although the Treasury believes that the Finance Bill is a crucial guide in how revenue collection will be undertaken, it is not clear if the numbers they are targeting would be achieved anyway. Many enterprise leaders and experts told the Finance and National Planning Committee that the Finance Bill 2024 is damaging to their operations.
If businesses are incapable of sustaining additional levies and taxes, laying off employees would further deepen the taxman’s efforts to raise revenue via income tax.Moreover, reduced incomes follow a period of reduced spending power on commodities whose taxes have been hiked.Many Kenyans believe that government priorities in expenditure are a big part of the problem.
Some have scoffed at the letter’s claim that a revenue shortfall would see rationalization measures in development funding – which only represents a small percentage of the government budget.
“Statehouse renovation, private budgets, offices of the 3 wives, travel and luxury budgets for the Executive. etc. the common man should give up their benefits, while they live in looting luxury while feeding off of us! How shameless, oppressive, punitive, and disgusting is this?” A Kenyan asked on X (formerly Twitter).
As Kenyans plan to intensify the ‘Occupy Parliament‘ protests against the Finance Bill this afternoon, many are questioning whether it is wise for the government to urge its citizens to ‘tighten their belts’ while maintaining its largesse. Recurrent expenditure remains high, arguably unsustainable, and there is still controversy in the legality of the CASs appointed by President William Ruto, among other positions..
Moreover, corruption and mismanagement of funds have made many doubtful as to whether any claims of revenue unavailability make any sense. So far, no efforts have been fruitful in recovering stolen funds that could cover revenue crunches in the government.