In a surprising move, President William Ruto has rejected the Finance Bill, 2024, in its entirety, sending it back to the National Assembly with a recommendation to remove all clauses. This decision has sparked a procedural debate within the legislature, as the Bill had already been passed and is crucial for the upcoming financial year.

The Finance Bill, 2024, is a legislative proposal to amend tax and duty laws for the fiscal year. According to legal requirements, the Bill must be enacted by June 30 to be effective for the next financial year.

President Ruto’s rejection means that for his recommendations to be enacted, MPs who previously supported the Bill, will need to align with those who opposed it. This alignment is necessary to prevent the Bill from being overridden by a two-thirds majority vote, which would allow it to proceed despite the President’s reservations.

Aden Duale, former Majority Leader in the National Assembly, emphasised the procedural challenges MPs face in overturning the President’s rejection. He highlighted the difficulty in gathering the 233 votes required to override the presidential memorandum, particularly after a significant number of MPs from the Kenya Kwanza coalition sided with the President’s decision.

Duale, known for his expertise in legislative processes, underscored that the handling of the President’s recommendations will follow established parliamentary procedures for dealing with presidential referrals of bills. This process ensures a thorough consideration of the President’s concerns before a final decision is made.

The fate of the Finance Bill 2024 now hinges on the delicate balance of parliamentary votes. As MPs prepare to deliberate on the President’s recommendations, the outcome will not only determine the bill’s future but also showcase the dynamics of legislative power in responding to executive decisions.

Budget uncertainty and planning challenges

The Finance Bill determines the framework for revenue generation through taxes and duties and allocates these funds across various sectors. Failure to pass the Bill or delays in its enactment create uncertainty in budget planning. Government departments and agencies rely on these allocations to plan their operations and service delivery effectively. Without clear budgetary guidelines, there is a risk of disruptions in essential services such as healthcare, education, infrastructure development, and social welfare programs.

Impact on economic stability and investment

Clarity in fiscal policies provided by the Finance Bill is critical for private sector investment decisions. Investors require predictability in tax policies and government spending plans to make informed decisions. Uncertainty resulting from delayed or unresolved budgetary issues can deter investments and economic activities, potentially affecting overall economic stability and growth prospects.