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{
    "id": 1076647,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1076647/?format=api",
    "text_counter": 392,
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    "content": "financial year, the National Treasury will become an implementing agency for projects such as the Dogo Kundu Special Economic Zone, the Standard Gauge Railway Naivasha and Mombasa Port Development Project, Lamu Port-South Sudan-Ethiopia Transport (LAPSSET) Project and the Kenya Mortgage Refinance Company. The National Treasury will find it difficult to strike a balance between being the implementer of public finance and also being a sectorial implementer of these infrastructure projects. The Committee notes with concern that after tabling of the Budget in Parliament, the National Treasury has formed a perpetual habit of submitting additional changes to the Budget which is under scrutiny by the Legislature, hence creating difficulties in arriving at the final budget. You also remember when we were also dealing with the Supplementary Budget I, there was another addendum that was brought on top of our Supplementary. That net effect of the proposed changes to the 2021/2022 Budget by the National Treasury has resulted in an overall reduction of the Budget with Kshs8.9 billion. Hon. Deputy Speaker, how are we going to finance the 2021/2022 budget? The National Treasury projects a total revenue collection of Kshs2.039 billion in the Financial Year 2021/2022, an increase by approximately Kshs200 billion from the previous year. Of this, the ordinary revenue will constitute Kshs1.776 trillion compared to Kshs1.57 trillion in this current year. Income tax which accounts for approximately 50 per cent of the tax revenue is projected to increase by Kshs102 billion. Moreover, there is an amount of Kshs835 billion in the Financial Year 2021/2022. On the other hand, Value Added Tax (VAT) is projected at Kshs473 billion. Excise Duty is projected at Kshs241 billion and import duty is at Kshs119 billion compared to Kshs395 billion, Kshs209 billion and Kshs96 billion, respectively, in the year 2020/2021. For the revenue projects, they appeared to be conservative and have complied with the International Monetary Fund (IMF) benchmarks. It should be noted that the expected revenue performance is based on the sustained recovery in economic performance. Should the risks to the growth outlook highlighted materialise, it may lead to significantly lower-than-projected revenue collection. The Committee notes with concern that the tax enhancement measures contained within the BPS of 2021 such as strengthening the audit function in the Domestic Tax Department, enhanced scanning, resolution of tax dispute through alternative dispute resolutions, and fast- tracking the conclusion of cases before the Tax Appeals Tribunal do not address the structural issues that have contributed to the decline in revenue as the share of economic activity. Hon. Deputy Speaker, further, the proposals contained in the Finance Bill 2021 are unlikely to contribute to the increase in revenue as a share of GDP. If revenue underperforms, it will lead to expansion of the fiscal deficit and a likely increase of the public debt levels. Going forward, the National Treasury projects a significantly higher growth in all the major revenue categories in the Financial Year 2021/2022 and the Medium Term. Consequently, the fiscal deficit as a share of GDP excluding grants is expected to improve from 8.2 per cent in 2021/22 to 4.5 per cent in 2023/24."
}