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Treasury team meets MPs over Budget format
Parliament in session: Treasury officials and MPs are set to discuss the format of the Budget this week. Photo/FILE
Treasury officials are scheduled to meet the Parliamentary Budget Committee Monday or next week as the assertiveness of the House in budget-making grows with focus on the new Constitution.
Budget Office director Phyllis Makau told Business Daily her team requested for the meeting to discuss presentation of proposals.
“They were supposed to agree on the format of the Budget,” she said about the meeting that was postponed last week.
In a clear indication that Parliament will actively engage Treasury in the process, in amendments to the Budget Committee’s response to the Budget Policy Statement (BPS), legislators increased the Parliamentary Service Commission (PSC) development budget from Sh2 billion to Sh2.4 billion.
Under the new Constitution only MPs through the PSC and the Judicial Service Commission can set their non-salary budgets.
It came soon after Speaker Kenneth Marende, in an unprecedented move, directed Treasury to implement the constitutional provision on the Equalisation Fund, supposed to take 0.5 per cent of the total national revenue.
Treasury had under the BPS 2011 excluded the Fund meant to go to development of the marginalised areas, projecting the first allocation of Sh3.5 billion in 2012/2013 Budget.
That is the same year allocation of funds to counties is set to commence.
The Constitution allows MPs to propose tax measures, a move that is likely to complicate plot for Treasury during transition.
But Ms Makau says any alterations, for now, are limited to varying sector ceilings by one percentage point.
“The fact is that there is a lot of interaction and little room for manipulation as there are many actors. In fact MPs now hold more responsibility,” she said.
Under the old laws, only the Finance minister and the President were allowed to vary tax measures.
But under the new laws, parliamentary committees can make tax proposals — a key challenge to Treasury going by the chaos created on public finances by the December 2010 introduction of tobacco taxes by the Finance Committee. The move cost Treasury more than Sh2 billion
As per the tradition, MPs scrutinise tax proposals for months after the Budget is read and in the process shoot down a number of them.
Under Section 48 of the old constitution, MPs were restricted to reducing but not increasing tax charge.
Some officials are already urging caution. “It is important that MPs’ action in this regard be publicised, time for public debate be allowed and implications spelt out properly,” said domestic tax commissioner John Njiraini.
“The executive henceforth needs to think through the Bills coming from the committees or the situation will be disastrous,” he said.
The committee will discuss with Treasury requirements of the law that it furnish the National Assembly with the Budget proposals before presentation to the public.
When all the structures are in place, Treasury will be advised by the Commission on Revenue Allocation on distributing funds.
However, the Senate would have to set the basis for allocation to counties every five years.
Controller of Budget
The Controller of Budget, to be appointed by the President again with approval of Parliament, will authorise all withdrawals by the county and national governments.
Parliament has already flexed its muscle by rejecting nomination of William Kirwa as Controller of Budget.
Both county and national budgets will be audited by the Auditor General appointed in a similar manner for a term of eight years.
Treasury officials, who strenuously opposed the December cigarette move, will be hoping for better understanding as the Kenya Revenue Authority collections are not looking up.
