The Public Finance Management ( Amendment ) Bill, No. 27 of 2024

SPECIAL ISSUE

Kenyu Gazeue Supplement No.97 (Senate Biils No.27

REPUBLIC OF KENYA

KENYA GAZETTE STT PPLEM ENT

SENATE BILLS,2024

| NAIROBI, 7thMay,2024 | NAIROBI, 7thMay,2024 | |-----------------------------------------------------|------------------------| | CONTENT | CONTENT | | Introduction into the Senate_ | PAGE | | The Public Finance Management (Amendment) Bill,2024 | 5.r-5 |

XEhOBIICOLKEWAV

KEMAV CVSELEANbbIEWEV

2EVVLEBInFaS034

THE PUBLIC FINANCE MANAGEMENT (AMENDMENT) BILL,2O24

A Bill for

• AN ACT of Parllament to anend the hblic Finance Management Act to provkle for the submission,
• consideration and passege of Cornty Flnance Bills.

ENACTED by Parliament of Kenya, as follows-

1. This Act may be cited as the Public Finance Management (Amendment) Act, 2024. 2. Section 129 of the Public Finance Management Act,2012, in this Act referred to as the "principal Act" is amended in sub section (2Xa), by deletiog the words, "except the Finance Bill". 3. The principal Act is amended by inserting the following new section immediately after sectiqr 131- 4. Submission. 131A. (l) The County Executive ;ffit"':#';:"' Committee member for finance shall, with rinanc"e airr the approval of the County Executive Committee, on or before 30th April, make a pronouncernent of the revenue raising measures for the county government and submit to the County Assembly, the Finance Bill.

• (2) Following submission of

6. the Finance Bill by County Executive Committee member for finance, the relevant committee of the County Assembly shall introduce the Bill in the County Assembly.

• (3) The County AssemblY shall

8. consider and pass the Finance Bill, with or without amendments, in time for it to be presented for assent by 30th June each year.

• (4) Any recommendations made by the relevant committee of the County Assembly or resolution passed bY the CountY Assembly on revenue matters shall-

10. (a) ensure the total amount of revenue raised is consistent with the approved fiscal framework;

Short ritle

Amcndment of section 129 of Cap.412A.

lnscnion of a new section in Cap.

4t2A

• t32.

5. The principat i\ct is amended by repealing section r33

• (b) take into account the principles of equity. certainty and ease of
• collcction:
• (c) consider the impact of
• the proposed changes on the composition of the tax revenue with refcrence to direct and indirect taxes:
• (d) consider domestic, regional and
• intemational tax trends:
• (e) consider the impact on
• devclopment, investment. employment and economic grora'th; arrd
• (f.) take into account the taxation and other tariff arrangements and obligations that Kenya has ratif ied, including taxation and tariff arrangements under the East Afiican Community Treaty.
• (5) The recommendation of the County Executive Comrnittee member for finance shall be included in a report and rabled in the County Assembly.

4. The principal Act is arnended by repealing section

Rcpcal of section 132 of Cap.4l?A

Rcpeal rrf scction l-13 of Cap.4l2A

MEMORANDUM OF OBJECTS AND REASONS

Statement of the Objects and Reasons for the Bill

The primary objective of this Bill is to amend the public Finance Management A9t, cap. 412A, to rectify ambiguities and inconsistencies within th.e existing. legisration, particurariy concirning the submission ano passage timelines of a County Finance Bill. The Bill ma"ndates that the county Executive Committee Member tbr finance is required to submit a county Finance Bill to the respective County Assembry by Aprir :0,t, .u"t, -y"o.. ensuring it is passed before the end of the finaniial-y.ui on June -loth. This amendment aligns with the stipulations of section izqttxu) oi the public Finance Management Act, which outlines the responsibiliiles or the County Executive committee member regarding the subniission of budgei eru.,,r,", and legislative requirements fbr the impGmentation of the .ountfgor.-*.nt budget.

. ,This legislation addresses the current legislative ambiguity rvhere. on one hand, the county Exccutive Committee m"-rnb"r tbr fina"nce'i, .*p..t"a t,, suLmit budget estimates arong with necessary drafr biils to thJ crr,,ui, Executive c.mmittee, inclucling the Finance Bili, while on the otr,.,.-r. ,ri"y """ instructed to submit all required bills to implement the budget-exclucling rl ,: Finance Bill-to the county.Assembry by Aprir 30th. rhis .rir"i.p","lir,r. led to delays and inefficiencies in .ounty fininciar management, *itt ion.," counties failing to meet the criticar timeiine for passing tEe County ii*n..

Bill as outlined in section 133 of the public Finanie Mariagement Aci.

Thc necessity for this amendment is further underscored by the p1e-ced-e19e set by the Nationar Assembry folrowing the case or peiitio'n No. ?51{ 2018 (okiya omtatah okoiti v iabinet Seiretary, Nation,,r i.earu.y & 3.others). The judicial decision highlighted the violaiion of the statutory !ryline1 by the cabinet Secretary and iesulted in the amendrn"ni oi tt.,. Public.Finance Management Act through the Statute r-"* rrrai.r."itan"ou, Amendments) Act.20r9, introducing tection 39A to rectify simila, irru", ut

the national level.

statement on the delegation of regisrative powers and rimitation of

fundamental rights and freedoms

The Bill does nor "gr3il any provisions rimiting any fundamentar rights

or freedoms in the Bill of Rights ancr it does not deleg-ate llgislative p;;;;l

Statement on whether the Bill concerns County Governments

This Bill concerns county governmenrs in terms of Articre l r0(l)(a) of the crnstitution as it directly impacts the funcrions and powers oi .oiin,y go\" rrments as set out in the Fourth Schedule to the constitution.

Specifically, the Bill addresses the legislative and financial management iJrponriUiflti.s of county govemments, ensuring a streamlined process for the preparation, submission, and approval of the County Finance Bill'

statement that the Bill is not a money Bill within the meaning of Article ll4 of the Constitution

The Bill is not a money Bill within the meaning of Article I 14 of the Constitution.

Dated the 30th APril' 2024.

215410

AARON CHERUIYOT, Senate Majoriry Leader Section 129(2)(a) of Cap. 4l2A which it is progtsed ftt amend-

129. County Executive Committee member to submit budget estimates and other documents to County Executive Committee for approval 2. (l) A County Executive Committee member for finance shall submit to the County Executive Committee for its approval- 3. (a) the budget estimates and other documenrs supporting the budget of the county government, excluding the county assembly; and 4. (b) the draft Bills at county level required to implement the county government budget. in sufficient time to meet the deadlines prescribed by this section.

• (2) Following approval by the County Executive Committee, the

6. County Executive Committee member for finance shall- 7. (a) submit to the county assembly the budget estimates. supporting documents, and any other Bills required to implement the budget, except the Finance Bill, by the 30th April in that year; and 8. (b) ensure that the estimates submitted in subsection (a) are in accordance with the resolutions adopted by county assembly on the County Fiscal Strategy Paper.

Section I 32 of Cap . 4 l2A w,hich it is proposed to clelete

132. Submission and consideration of the revenue measures in the county assembly raising

-

• (l) Each financial year, the County Executive member for finance shall, with the approval of the County Executive Committee, make a pronouncement of the revenue raising measures for the county govemment.
• (2) The County Executive Committee member for finance shall, on the same date that the revenue raising measures are pronounced, submit to the county assembly the County Finance Bill, setting out the revenue raising measures for the county government. together with a policy statement expounding on those measures.
• (3) Any recommendations made by the relevant committee or
• adopted by the county assembly on revenue matters shall-
• (a) ensure that the total amount of revenue raised is consistent with the approved fiscal framework and the County Allocation of
• Revenue Act;

• (b) take into account the principles of equity, certainty and ease of
• collection;
• (c) consider the impact of the proposed changes on the composition
• of tax revenue with reference to direct and indirect taxes;
• (d) consider domestic, regional and international tax trends;
• (e) consider the impact on development, investment, employment
• and economic growth; and
• (0 take into account the taxation and other tariff agreements and obligations that Kenya has ratified, including taxation and tariff agreements under the East African Community Treaty.

Section 133 of Cap. 4 I 2A which it is proposed to delete -

133. Approval of the Finance Bill

Not later than ninety days after passing the Appropriation Bill, the county assembly shall consider and approve the Finance Bill with or without amendments.