Treasury on the spot over ‘illegal’ tax collection

April 12, 2012
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, NAIROBI, Kenya, Apr 12 – The Treasury should prepare to refund taxes to Kenyans that have so far been illegally collected, if it fails to submit the Finance Bill 2011 to Parliament by April 20.

The Parliamentary Budget Committee asserted that the Treasury was aware that passage of the Finance Bill was overdue, yet it appeared nonchalant.

“The continued collection of illegal taxes by the government smacks of great indiscipline on the part of Treasury. To discourage such behaviour in future, the Committee recommends that Treasury should submit the Finance Bill before April 20,” Elias Mbau said the Treasury.

Failure by the Treasury to present the Finance Bill since its tabling in June last year has resulted in the government continuing to collect taxes illegally after December 31, when the Provisional Collection of Taxes Act cap 415 lapsed.

The provision empowers the Minister for Finance to make an order that all or any specified provisions of the Bill relating to taxes or duties have effect as if the Bill were passed into law.

Mbau was agitated over the Treasury’s lax attitude toward the budget process, having already missed the March 21 deadline for both the Budget Policy Statement (BPS) and Finance Bill and delay in presenting the supplementary budget estimates.

“To anticipate supplementary budget to be debated by end of April for monies to be approved by Parliament, to be spent between May and June; we can only be saying that we either shall be conspiring to have allowed illegal or ineligible expenditures,” he said.

The supplementary budget was due on Thursday, April 12 but has been given an extension until April 20, with only extra budgetary expenditures incurred in the last two months to be approved by Parliament.

With time constraints now put on the committee due to the delays, Mbau added that it would be virtually impossible to present the new budget proposals by the end of this month, given the low absorptive capacity of some ministries and lengthy procurement procedures.

“The Committee will make its recommendations which it will ensure are taken into account in the budget proposals expected by 30th of April, irrespective of when we receive the BPS from Treasury,” he explained.

Strict adherence to the budget timelines is crucial, the chair further emphasised, to avoid a scenario where Parliament resorts to a “Vote on Account,” approving 50 percent of the budget without scrutiny to allow government to continue its operations as debates on the budget proposal continue.

Finance Minister Njeru Githae assured that he will table the Finance Bill and BPS on April 17 after parliamentary sessions resume, acknowledging delays with the two documents.

“The Finance Bill is still at the committee stage. I can assure you it will be tabled and I will not defer it again. A decision has to be made,” he said in a previous interview.

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