from: Judy Miriga

Folks,

I am saddened to note such irresponsible behavior of carelessness, neglect, Abuse and of impunity, and that Uhuru refused to table Appropriation Bill before adjournment for the Christmas holidays but took it upon himself to run the Finance Department as personal and private business and without following the legislative proceedure.

For Transparency and Accountability, it is a legal legislative requirement that a Legislative Act proposes for the Financial Expenditures, where they set apart funds for specific use at intervals of a given period of time. In most cases it is set on yearly, six monthly or every quarter of a year, depending on the standing agreement set by the Legislative body.

These funds are collected from financial Government pool of Revenues Collection and are distributed to meet Government expenses and expenditures.

Typically all expenditures must be put before parliament to authorize and facilitate its spending. The same must certify and confirm the balance and control of financial standing that cannot go beyond the yearly Budget. Incase of any adjustments for any reason, the same must be brought back to Parliament for Discussion and Authorization over the use of money before the spending of such Public Finances can be utilized. It is important to prioritize, asses and justify needs for the expenditure, balanced spending to avoid imbalances and give legal effect to the Budget……

The Appropriation bill also validate taxation, all bills, promissory notes and Government Bonds also relates to revenue, which are balanced yearly over income tax, collectibles and expenditure.

Tabling of appropriation bill authorizes the Government to spend public taxpayer money for a certain programe.

A financial bill sets aside money to be spent by the Government, and states how money is to be used for specific spending. An approval by Parliamentary Legislatures must consented spending of such money in a transparent and accountable manner. The Appropriation Bill must face threshold of voting to agree or not to agree.

Incase there are misappropriation, embezzlement or misuse, Members of Parliament can vote a “No Confidence” on the Minister for Finance and equally, the General Public have a right to recal or ask for removal of the Minister for Finance from his irresponsibility from carefully overseeing Public Finances.

In this case, I feel, Uhuru have gone overboard by illegally and unconstitutionally by-passing the Legislative procedure and taking advantage of running the Ministry of Finance as private household personal business.

We demand an explanation and an appeal to Supreme Court to have Uhuru refund Sh368 billion (Taxpayer money) back to the Consolidated Fund. Meanwhile, Uhuru should be removed from Ministry of Finance while investigations are being made.

Judy Miriga
Diaspora Spokesperson
Executive Director
Confederation Council Foundation for Africa Inc.,
USA
http://socioeconomicforum50.blogspot.com

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Judge: Uhuru broke law

The Treasury has been spared further embarrassment after a judge dismissed a petition seeking to have it refund Sh368 billion to the Consolidated Fund, which is the Government’s main bank account.

But High Court judge Justice David Majanja was highly critical of Finance Minister Uhuru Kenyatta for breaching the Constitution through his selective application of its various articles.

The ruling also brings into focus Attorney General Prof Githu Muigai, who is the State’s chief legal advisor and the first respondent in the petition, with Uhuru listed as the second respondent.

Justice Majanja was explicit that Uhuru, who is also the Deputy Prime Minister, should have tabled an Appropriations Bill as required by Article 221 of the Constitution, before seeking Parliament’s consent to withdraw money from the Consolidated Fund to finance Government operations.

“Every failure to follow the letter of the Constitution harms the Constitution itself, breeds cynicism and encourages impunity particularly when such failure stems from a deliberate effort to undermine the Constitution,” said Justice Majanja.

In contrast, he only had kind words for National Assembly Speaker Kenneth Marende.

Majanja said the Speaker displayed a healthy and welcome respect for the rule of law, and the principle of separation of powers, despite giving Uhuru a window to escape the wrath of Parliament on June 7 last year.

The last word

However, said Justice Majanja “the Judiciary has the last word in the event of dispute on the interpretation and application of the Constitution.”

He noted: “… the Constitution has ushered in a new era, not of Parliamentary supremacy, but one of supremacy of the Constitution. The superintendents of the Constitution are the courts of law which recognise that each organ in its own sphere working in accordance with law not only strengthens the Constitution, but ensures that the aspirations of Kenyans are met.”

The judge was clear that his decision to dismiss the petition was not a vindication of Uhuru’s actions, but said he was unable to grant the petitioners their wish, as this would endanger the process of implementing the Constitution given that six months had passed since the incident.

“Preparations should now be made to comply with the provisions of the Constitution in the next financial year,” ruled Justice Majanja.

Justice Majanja said annulling Parliament’s decision of June 14 would have set in motion “a chain reaction whose effects would be grave and more harmful to the implementation of the Constitution.”

He quoted Articles 3, 10(1) and 20(4) of the Constitution which he said emphasises that everyone, including State officials like Uhuru, have an obligation to respect, uphold and defend the Constitution

He defended Speaker Marende saying that he acknowledged that the law had been broken by the Finance minister, but gave proper guidance “as is required by any officer of State acting in accordance with the Constitution.”

On Sunday, political and civil society leaders challenged President Kibaki and Prime Minister Raila Odinga to ensure the Constitution is not broken.

Those who spoke to The Standard said the ruling delivered three weeks ago, but which escaped media scrutiny, brings to the fore questions about the commitment of the Executive to uphold the rule of the law and respect for the Constitution Kenyans endorsed in August 2010, hoping to end a culture of impunity.

“I therefore hold that for there to be compliance with Article 222, there must be an Appropriation Act or Bill in place and it was in breach of the Constitution to proceed to withdraw money from the Consolidated Fund without the existence of an Appropriation Act or Bill,” said Majanja in the ruling delivered on December 23 two days before Christmas.

Defended treasury

The State defended the Treasury’s actions and sought a dismissal of the petition arguing it lacked merit, was frivolous and incompetent and that it was a transition period and no law was broken.

The State denied claims it violated the public’s right to participate in budget making process and the judge agreed. The next Budget cycle for the financial year 2012-2013 begins with a tabling by March 21 this year of the expenditure estimates for various ministries as well as the Parliamentary Service Commission and the Chief Registrar of the Judiciary under Standing Orders of Parliament.

Justice Majanja said that while the Appropriations Act as allows the Finance minister to seek Parliamentary approval to dip into the Consolidated Fund, he can only do so after tabling an Appropriations Bill, which Uhuru failed to do.

Two members of the civil society Jayne Mati of Mars Group and Dennis Adieno of the National Taxpayer’s Association moved to court to seeking orders to ensure the Executive complies with the Constitution.

Maragwa MP, Elias Mbau who chairs the Parliamentary Budget Committee agreed with the judge, saying that even though a mistake was made, it is not a licence for violation of the Constitution in future. Such mistakes, he said, were only tolerable because the country is transition.

“In this crucial and critical moment every institution is bending backwards a lit bit to accommodate others so as not to have the country crumble. But it is a warning to future ministers that the same leeway will not be granted in future,” said Mbau.

Public scrutiny

The Executive Director of International Centre for Policy and Conflict, Mr Ndung’u Wainaina, dismissed the argument regarding the transition period, pointing out that it has been used by Government to evade public scrutiny.

“The argument about transition period doesn’t hold water. It is being used as an excuse to avoid public scrutiny, but the ruling is a statement to the Government that it must toe the line,” said Wainaina.

The withdrawal of Sh368 billion from the Consolidated Fund represented one-half of the total net estimates of the Government’s recurrent and development expenditure.

Wainaina said MPs who legalised the appropriation of Sh368 billion championed their own interests and ignored the Constitution.

“They are doing everything in their own interest. These people have no regard for the law at all. They are used to shortcuts because they fear to be put under scrutiny,” said Wainaina.

In his earlier memo to the Budget Committee in June, Mars Group Chairman Malibu Mati said the move was unconstitutional and asked it to intervene.

Nominated MP and Chairman of the Parliamentary Committee on Equal Opportunities, Mr Mohammed Affey hailed the court’s ruling pointing out that the culture of impunity must stop.

“No money should be used without following the law. It was wrong to allow this. The law is the law and it must be followed. I support the ruling,” said Affey.

Another member of the Budget Committee, Subukia MP, Mr Nelson Gaichuhie, said the ruling reflected the reality given that Kenya is still transiting from the old order, but pointed out that it should not be allowed in future.

“Until we form the next Government, we are still in some form of mishap. We have to transform gradually even if we are to follow the law. The good thing is that the future will have a clear cut line of doing things,” said Gaichuhie. click here to read the high court ruling

Uhuru seeks new weapon against inflation with change in tax law

By George Omondi (email the author)

Posted Sunday, December 18 2011 at 16:04

The law, however, gives Treasury a free hand to lower import duty on maize, wheat, beans, milk or rice by any amount during periods of civil strife, national disaster or calamity.

Treasury is seeking new powers to vary excise duty chargeable on goods according to the rate of inflation in yet another signal of the unease that the spiralling cost of living is causing policy makers.

Also read: Treasury falls 88pc below borrowing plan

Through amendments to be introduced in the Finance Bill 2011, Finance minister Uhuru Kenyatta is seeking powers to vary excise duty beyond the current limit of not more than 30 per cent of the applicable (official) rate.

“The minister may, by a notice in the Gazette, adjust the specific rate of excise duty to take account of inflation,” reads one of the new clauses that Mr Kenyatta will introduce in the Customs and Excise Act.

The tool would be particularly useful in the event of widespread social unrest caused by a steep rise in the price of consumer goods as has happened in recent months.

Section 119 of the Customs and Excise Act that Mr Kenyatta is seeking to amend allows him to increase or decrease excise duty by up to 30 per cent of the statutory rate without consulting Parliament.

The Act imposes excise duty on a range of goods, among them petroleum products, shampoos, deodorants, alcoholic drinks, cigarettes, wrapping materials, juices and bottled water.

Tax experts said the proposed changes imply that in future, the level of the government’s intervention may go beyond the current statutory limits if required.

“I presume the minister wants a legal backing for his past actions because he has all along been changing the specific excise rates to cater for inflation,” said Mr Nikhil Hira, a tax partner at Deloitte.

In April, Mr Kenyatta suspended the 30 per cent excise duty on kerosene and reduced that on diesel by 20 per cent to ease pump prices as high international crude oil prices hit key segments of the economy.

Sudden increases

Steve Okello, a partner at PricewaterhouseCoopers said giving the minister a free hand to vary excise duty with inflation will help cushion the consumer from sudden increases in costs such as transport.

Mr Okello said that apart from petroleum products, most goods that attract excise duty are luxuries whose pricing is irrelevant to low income earners currently bearing the brunt of high inflation

“Consumers would see huge impact on retail prices of essential commodities if the state had a free hand to tie rate of import duty on basic commodities to inflation,” Mr Okello told the Business Daily on Friday.

Under the East African Customs Management Act, Kenya has to consult her integration partners before adjusting customs (import and export) taxes.

But even as the government moves to influence national pricing, analysts are divided on the effectiveness of such regulatory measures.

“Whether or not the taxes are pegged to rate of inflation, prices are rising because of the inability by government to play its supervisory role, allowing traders to hoard basic commodities,” said Mr Otieno Odhiambo, an investments lecturer at the University of Nairobi.

In recent months, failure to supervise import licences has been blamed for the excessive increases in the price of flour and sugar, which are among the highest in the world.

“Kenyans pay about twice as much for sugar as Europeans, even though the drought did not affect sugar-producing areas.” says the World Bank’s latest report.

Kenyan consumers are paying up to $530 (Sh47, 700) per tonne of maize or more due to additional policy distortions that have disrupted the domestic food market.

This has translated to a higher price of Sh 112 per two kilogramme packet of maize flour. Kenyans paid a record $45 (Sh4, 000) per bag of maize in July 2011, which was more than double the price at the beginning of the year and about 70 per cent above the already high world market prices.

A breakdown of Kenya’s inflation by income groups shows that low income households have been hit hardest by inflation in 2011.

For instance, in October 2011, the inflation experienced by low income households was 19.6 per cent, compared to the previous year, in contrast to 14.5 per cent for high income households.

Mr Kenyatta is expected to introduce the amendments in the Finance Bill 2011 on Tuesday at the Committee Stage after having failed to do so on Thursday as Parliament adjourned early following emotive debate on Ethics and Anti-Corruption Commission nominees.

Apart from pegging excise duty to inflation, the changes are also seeking to end the current stand-off between the Kenya Revenue Authority and local manufacturers of wines and beers.

While the 2011/12 Budget Speech had changed the excise duty on beer from a specific rate to a hybrid of both the specific and ad valorem rate – in favour of the higher rate, this is captured in the Finance Bill 2011 as Sh70 per litre or Sh40 of the Retail Selling Price (RSP).

“The changes do not expressly define RSP and therefore still leaves room for different interpretations between manufacturers and KRA officials,” said Mr Hira.

Mr Kenyatta is proposing to amend the Customs and Excise Act to include RSP as the basis for computing excise on locally manufactured beer and wine.

Mr Hira, however, says the amendment still fails to define what RSP is, presenting a problem to the alcohol manufacturers since they do not have direct control of the price that the product is eventually sold at the marketplace.

omondi@ke.nationmedia.com