Creation of a spending plan and revenue-raising measures for a country is a highly emotive issue and needs to be looked at with the precision of a surgeon. This becomes more complicated when a country is faced with a pandemic such as Covid-19. Resources are limited whereas the needs are high. During such a time it is important that the government does not harm the individual citizen even as it tries to save the economy. Therefore, the perfect spending plan and revenue-raising measures is one that reflects the social, political and economic realities on the ground.
It is in times of distress such as these when different sectors and businesses are struggling to remain afloat that citizens look to governments for information to avoid confusion, direction to plan for future investments and protection from the health and economic impacts. The situation is worsened by the fact that there are two uncertainties, one of how long the virus will last and the other is the economic outlook of the country even with the containment measures being scaled back gradually. Therefore, budgeting needs to address these uncertainties.
In a bid to increase the tax revenues the Treasury announced some changes in the Finance Bill 2020. These changes were a clear indication that much of the budget will be financed by tax revenue. Some of the changes, expected to take effect on July 1 include the income tax on pension for retirees aged 65 and above years, 14 percent VAT on cooking gas (LPG) removing it from tax-exempt goods, a minimum tax of one percent on company sales whether they are making a loss or not and a digital tax of 1.5 percent on sales of foreign tech firms with earnings from Kenya.
Contrary to the citizen’s expectation the government through the proposed tax changes had no plans of protecting them from the ravaging effects of the Covid-19 pandemic and neither was the budget seeking to safeguard livelihoods. It is vivid that the government was keen on improving its revenue collection and did not focus on the lives of Kenyans. Thus, the proposed measures elicited policy debates among young people, the elderly and business owners who have borne the brunt of not only the effects of Covid-19 pandemic but also the locust invasion and floods.
As these debates grew eyes were on the National Assembly to salvage the situation. Despite the present exceptional challenges faced by our legislators, the National Assembly moved with speed to save its lost glory as being an appendage of the executive.
Whereas the government seemed blind to the reality, the National Assembly during its consideration of the Finance Bill, 2020 through the Departmental Committee on Finance and Planning, resolved to put a smile on Kenyans by deleting several proposed changes. The National Assembly in its wisdom moved to zero-rate the price of unga, wheat flour and cooking gas and further opposed the imposition of the tax on the pensioners.
Local media reports indicate that the move by Parliament is, however, expected to set a protracted battle between the Legislature and the Executive should the President return the Bill to the lawmakers. What is good to note is that the National Assembly stood its ground and that it is not just about the president’s Agenda but the welfare of Wanjiku
As it has often been noted, COVID-19 opens opportunities for moving more decisively towards sustainable and inclusive growth. The pace has been set and moving forward our legislators still need to show Kenyans, through the policies that they make or approve that they are aware of the citizen’s vulnerability to COVID-19 and that its economic impact is very different across social groups.