What Happens Next after Ruto Withdraws Finance Bill 2024: Will Bill Become Law Automatically?

What Happens Next after Ruto Withdraws Finance Bill 2024: Will Bill Become Law Automatically?

• President William Ruto's refusal to sign the Finance Bill 2024 has sparked a major debate on Kenya's future revenue generation and fiscal policies
• Tax expert Kipkemboi Rotuk suggests budget cuts, increased compliance efforts, and seeking additional loans as potential solutions to address the budget shortfall
• A section of Kenyans had expressed concern that the rules of the land allow the act to become law after the president fails to assent to it within 14 days

Muyela Roberto is a business journalist at TUKO.co.ke with over 9 years of experience in the digital media, offering deep insights into Kenyan and global economic trends.

President William Ruto has declined to assent to the Finance Bill 2024, passed by the National Assembly.

How does a bill become law in Kenya?

The contentious finance bill, which had caused widespread protests in the country, only needed the president's approval to become law.

According to the procedure of a bill becoming law shared by Kenya's Parliament on its website, bills amending county operations don't go straight to the president. They need to be approved by the Senate first before the president can approve them.

However, the Finance Bill 2024 falls in the category of bills that don't need to go through the Senate since it only touches on the operations of the national government.

After the National Assembly votes and approves the bill, it is sent to the president, who will, within 14 days, sign it or send it back to the House for more amendments to be considered.

The law, however, allows MPs to amend the bill or override it with a two-thirds majority vote, and the bill becomes law.

The bill also becomes law if the president fails to assent to it within 14 days. In Ruto's case, the president will have to write to the House and explain why he failed to assent to it to avoid a circumstance where the act automatically becomes law.

Kenya to fall back on Finance Bill 2023

Tax expert Kipkemboi Rotuk told TUKO.co.ke that the government will still have revenue collection modalities even after the Finance Bill 2024 has been withdrawn.

Rotuk, who is also an advocate at the High Court of Kenya, clarified that the proposals in the bill were not to fund the entire 2024-2025 budget, explaining that the proposed levies that were introduced in the bill were projected to net about KSh 200 billion more.

"In Kenya, the government can only generate revenue by law, and the preferred tool is the Finance Act and levies, which allows for new areas to expand the tax base either by increased rates or other measures to improve compliance. Inevitably, it has the implication that by the time the Treasury prepares its budget estimates, it has already considered the situation if the existing Finance Act continues in operation. They then aim for additional sources, which in this case, the Treasury Cabinet Secretary confirmed aims to raise an additional KSh 200 billion, including projections on debt deficit to be filled by taking additional loans."

"Treasury is forced to fall back to the Finance Act 2023. The government will now have to resort to budget cuts and austerity to match the reduced revenue projections. They could also seek new ways to increase compliance and aggressive collection, which may enable them to collect more, but that can only be so much compared to the easy low-lying fruits of adjusting rates and taxing at source. The ability of the government to go back to the loan market appears more complicated and may have to breach its debt targets to meet debt repayments," explained Rotuk.

According to Rotuk, the government now has no other option than to use all means possible to expand the tax bracket to net more revenue.

He explained that the government's options include increasing service fees for payable services or seeking more grants or loans to plug the deficit.

"It, therefore, appears that the only option under the Finance Act 2023 is to reduce the budget by the expected shortfall, find ways of increased compliance as there is still a significant amount of uncollected revenue, opt for additional levies permitted in law, increase service fees for payable services or seek additional loan facilities to match the shortfall. All tight options," he concluded.

Lawyer Ochieng' Oginga: President does not have powers to withdraw bills

According to advocate Ochieng Oginga, the president does not have powers to withdraw bill.

His powers, Oginga urgues, are limited to refering the bill back to parliiament while indicating reservations.

"In the present case, the National Assembly commences its recess on June, 26 and shall resume on July 23. The 14 days' period lapses on July 11; and thus the Finance Fill, 2024 becomes law. The Speaker can however call for a special sitting to ensure full compliance with the provisions of Article 115 of the Constitution of Kenya, 2010 as read with the National Assembly Standing Orders," he explained in a statement.

The withdrawal of bills is governed by Standing Order 140 of the Standing Orders of the National Assembly whereby:

• Either before the commencement of business or on the Order of the Day for any stage of the Bill being read, the Member in charge of a bill may, without notice, claim to withdraw a Bill.
• If the Speaker is of the opinion that the claim is not an abuse of the proceedings of the House, the Speaker shall direct that the bill shall be withdrawn.
• A bill seeking to implement a resolution of the House or a recommendation of the Public Petitions Committee to enact, amend or repeal any legislation may only be withdrawn with the leave of the Speaker.
• If a member in charge of a bill desires to withdraw a bill before it is introduced in the House, the member shall, in writing specifying the reasons for the withdrawal, notify the Speaker of the withdrawal.

More details about Ruto's withdrawal of Finance Bill 2024

• Larry Madowo slams William Ruto for withdrawing Finance Bill 2024 after deaths.
• List of austerity measures government has taken after withdrawing Finance Bill 2024
• Rigathi Gachagua pleads with Kenyans to forgive MPs who votes Yes, allow them to work