What next after the Finance Bill is tabled?

The National Assembly during the budget reading by Cabinet Secretary, National Treasury & Economic Planning Njuguna Ndung'u on June 13, 2024.

Photo credit: Dennis Onsongo | Nation Media Group

What is a Finance Bill?

A Finance Bill once passed into law gives the government the legal force to collect taxes to finance the country’s budget as appropriated by the National Assembly. The Bill is enacted every financial year, and being a “Money Bill” it is an exclusive function of the National Assembly. Previously, the Bill used to be enacted 90 days after the passage of the Appropriations Bill, which has a deadline of June 30 every financial year.

However, an amendment to the Public Finance Management (PFM) Act means that the Bill must be enacted by June 30 and come into force by July 1, which is the start of a financial year, so that the Kenya Revenue Authority (KRA) can start collecting taxes. It expires at the end of each financial year.

What happens after the Finance Bill is tabled?

Usually, the Finance Bill is presented to the National Assembly as a legislative proposal every year by the National Treasury Cabinet Secretary on the same day the annual estimates for the national government, including the executive, Parliament and judiciary are tabled. This is in line with section 37 (2) (c) of the Public Finance Management (PFM) Act. Once the Bill is presented, it is prepared by the legal department in Parliament and published before being tabled in the name of the chairman of the House’s Finance and National Planning Committee. It is then committed to the Finance Committee to undertake public hearings and submit a report to the House on its consideration.

Depending on the number of memoranda submitted on the Bill, the committee may extend its public hearings period but with the authority of the House Speaker, before tabling its report, which must incorporate the views of the people. The Bill is debated on the basis of the report presented. The report may also propose areas of amendments, which is clause by clause or recommend that the House adopts the Bill as published.

Do MPs have powers to alter what the committee has tabled?

Yes. The MPs possess such powers to consider the report in a manner they deem fit. If the MPs feel the committee hasn’t done as per expectations or has not included the views of the public, it may, in their numbers choose to shoot down the report on the Bill at the second reading stage. Second reading refers to the debate stage on the Bill.

That is why at the end of the second reading, a question is put for a Bill to proceed to the next stage and a vote is taken. If the MPs choose to vote “No” on the report of the Bill, then the Bill, just like any other, stands lost and can only be introduced afresh after six months as per the Standing Orders. This is akin to a vote of no confidence in the government because it portends a serious constitutional crisis as taxes to finance the budget cannot be collected.

What if there is a deadlock in Parliament?

It has never happened before in the country’s history. Nonetheless, it is the responsibility of the National Assembly to pass the Bill with or without amendments and have it submitted to the president for assent or reject it and cause a crisis in terms of denying the government the chance to collect the taxes it requires to finance its budget.

In any case, the Bill has timelines- by June 30, it must have been passed by the MPs so that the President can sign it by July 1, to enable KRA start collecting taxes. The Provisional Collection of Taxes and Duties Act of 2018 that the government used to collect taxes pending the enactment of the Finance Bill was nullified by the High Court.

What will they transmit to the President?

Usually, it is a Vellum, incorporating all the amendments made to the various clauses of the Bill on the floor of the House that is sent to the President for assent. In case of a deadlock, then it means that nothing will be sent to the Head of State for assent and that the Bill will stand lost.

Can MPs defy the President? Numbers needed?

Article 115 of the Constitution states that within 14 days after receipt of a Bill, the President shall assent to it or refer it back to Parliament for reconsideration, noting reservations concerning the Bill. If referred back, Parliament may, following the appropriate procedures, amend the Bill as recommended by the President’s reservations or pass it a second time without amendment. If amended to fully accommodate the President’s reservations, the appropriate Speaker shall re-submit it to the Head of State for assent.

The House may also pass the Bill with amendments that do not fully accommodate the President’s reservations by a vote supported by two-thirds (233) of the 349 MPs. If the President neither signs the Bill nor returns it to the House for reconsideration, it shall become law on its own motion on the 14th day from the date it was transmitted for assent.

When does the Finance Bill kick off?

The commencement of the Bill once enacted, is in respect with its sections. For instance, sections 42 (a) (i), (I), (J) and (K) shall come into operation on September 1, 2024. Sections 8, 12 and 25 (b) (v) shall come into force on January 1, 2025. The other sections of the law shall become effective on July 1, 2024.

What happens to the budget estimates?

Section 37 of the Public Finance Management Act states that the budget estimates for the national government- executive, Parliament and judiciary shall be presented to the National Assembly by the Treasury CS by April 30 of every financial year. Standing Order 235 (4) of the National Assembly Standing Orders states that upon being laid before the House, the estimates shall stand committed to each departmental committee to consider and make recommendations to the Budget and Appropriations Committee (BAC) within 21 days of committal. BAC shall make recommendations to the House.

How does BAC factor in the views of departmental committees?

The House rules provide that BAC shall discuss and review the budget estimates and make recommendations while taking into account the views of the departmental committees, views of the CS National Treasury and the public. The report of BAC shall be considered at the Committee of Supply where each government agency is supplied with funds for the expenditure.

Can MPs propose changes on the BAC report on estimates?

An amendment to any vote to increase or reduce the sum allotted to any programme or the vote may only be moved in accordance with the recommendations of BAC.

What is Appropriations Bill?

The National Assembly enacts the Appropriations Bill annually to give government agencies the legal force to spend the allocated sums.

PAYE Tax Calculator

Note: The results are not exact but very close to the actual.