Treasury Cabinet Secretary John Mbadi has hinted at the possibility of reinstating some clauses from the withdrawn Finance Bill 2024.
During the handover ceremony on Monday, where he succeeded Njuguna Ndung'u, Mbadi emphasized the importance of maintaining a robust tax expenditure system to support national development. He pointed out that some of the provisions in the controversial bill were aimed at addressing the country's longstanding expenditure challenges.
"There are elements in that Bill that would have contributed to the country's growth," Mbadi stated. "One key area is tax expenditure, which has been a major source of tax leakage. Many of the tax refund claims are fraudulent, and this has been a persistent issue."
Mbadi suggested that one way to reduce tax expenditures is by moving basic commodities, which significantly impact the cost of living, from zero-rated status to tax-exempt status. "By doing this, we can eliminate the zero-rating of commodities that ultimately burden our system," he explained. "Kenyans need to understand that while we will provide relief on essential items, it’s better to use tax exemptions rather than zero-rating, which tends to benefit businesses rather than consumers."
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The newly appointed Treasury chief committed to refining some of the progressive clauses from the scrapped Bill to tackle the nation's fiscal issues. He expressed his determination to revitalize the financially strained ministry and address the country's budgetary challenges.
"I have no illusions about the difficulties that lie ahead," Mbadi remarked.
The Finance Bill had initially included clauses aimed at increasing tax revenue to reduce the budget deficit and address the nation's growing debt crisis.
