National Assembly Speaker Moses Wetangula has officially referred President William Ruto’s Memorandum of Referral concerning the Finance Bill 2024/25 to Parliament’s Departmental Committee on Finance and Planning. This marks the beginning of the process to withdraw the controversial bill, following the President’s recommendations.
With Parliament currently on recess until Tuesday, July 23, 2024, there are questions about how the House will proceed with the retraction of the bill. Speaker Wetangula clarified that the House will not immediately reconvene to discuss President Ruto’s memorandum. He explained the basic procedures and implications of rejecting the Finance Bill 2024 on the fiscal year 2024/25.
Procedure for Consideration of the President’s Memorandum
Article 115 of the Constitution empowers the President to refer a Bill back to Parliament for reconsideration, noting any reservations. Parliament must then consider these reservations as provided under Article 115.
President’s Recommendations on the Finance Bill, 2024
The President’s Memorandum has referred the Finance Bill, 2024 back to the Parliament with reservations, recommending the deletion of all sixty-nine clauses of the bill. This essentially constitutes a rejection of the bill in its entirety.
Effect of the President’s Memorandum and Potential Revival of the Bill
If the National Assembly approves the President’s reservations, the entire bill will be lost. Any Member who wishes to negate the President’s reservations or revive any of the bill’s clauses must secure the votes of at least two-thirds of the Members of the National Assembly, or 233 Members, as per Article 115(4)(a) of the Constitution.
Next Steps
Upon receipt of the President’s Memorandum, the Speaker is required to refer it to the Departmental Committee on Finance and National Planning. The Committee must then report to the House at its next sitting. If the Committee fails to report, the House will consider the Memorandum at the Committee of the Whole House upon resumption from recess.
Guiding Principles for the Committee and the House
The President’s Memorandum, which recommends deleting all clauses of the Bill, reflects the voice of the people of Kenya, who have rejected the bill in its entirety. The Committee and the House must consider this justification in their deliberations.
The Link Between the Budget, the Finance Bill, and the Appropriation Bill
The Budget for any financial year comprises Estimates of Expenditure for the national government. These are translated into an Appropriation Bill for consideration and passage by the National Assembly. Projections of revenue, loans, and grants required to finance the Budget are also included.
New or additional taxation measures and variations to existing tax measures are introduced through a Finance Bill, which consolidates various proposed taxation measures intended to raise additional revenue to support the budget.
Will the National Assembly Be Recalled?
Standing Order 42(3) of the National Assembly Standing Orders requires the Speaker to transmit any Message received from the President to every Member when the House is not in session and report it to the House on the day it next sits. The House, currently on a short recess, is scheduled to resume on July 23, 2024. The Committee on Finance and National Planning must report on the President’s Memorandum on this day.
Can the Finance Bill, 2024 Become Law by Effluxion of Time?
Emphatically, no. Having been referred back to the National Assembly, the Finance Bill, 2024 cannot become law through mere lapse of time.
Implications of the Rejection and Loss of the Finance Bill, 2024
Rejection of the Finance Bill, 2024 will create a financing gap of approximately Ksh.300 billion between the expenditure approved through the Appropriation Bill, 2024 and projected revenues from existing tax measures. The next financial year begins on July 1, 2024. The instrument authorizing the withdrawal of monies from the Consolidated Fund is the Appropriation Bill, which is distinct from the Finance Bill.
The financing gap may be bridged by reducing approved expenditure, achievable through enacting a Supplementary Appropriation Bill in accordance with the applicable procedure.
As the process unfolds, it remains to be seen how Parliament will address these significant fiscal challenges.
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