John Mbadi Ng’ongo has assumed his role as Kenya’s new Cabinet Secretary for the National Treasury and Economic Planning after being cleared by the National Assembly.
Mbadi who until his appointment by President William Ruto, was the chairman and nominated Member of Parliament of the Orange Democratic Party (ODM) and Chairman of the Parliamentary Accounts Committee (PAC) becomes the second person to hold the docket under the Kenya Kwanza administration after dismissal of Prof. Njuguna Ndung’u.
The longtime legislator who was sworn in Thursday at State House Nairobi takes over the country’s finance and economic affairs on the backdrop of a withdrawn Finance Bill 2024 and a subsequent declaration of Finance Act 2023 illegal by the Court of Appeal over insufficient public participation and other provisions of the law being declared unconstitutional.
Already, parliament has projected a Ksh 344.3 billion in revenue shortfall as a result of the withdrawal of the the Finance Bill 2024.
During his vetting by Appointments Committee of the National Assembly chaired Speaker Moses Wetangula, Mbadi told the committee his plans to propose amendments to various tax statutes targeting Import Duty Act, Excise Duty Act, VAT Act, Income Tax Act, Tax Procedure Act and Fees and Levies Act.
“We need to come up with a clear legislation on public participation. Given the recent events at the courts, this is a priority and I am looking at the majority leader and the minority leader to get a legislation in place,” he told the committee during Saturday vetting.
Mbadi who played down increasing tax rates to mobilize additional revenues to finance the budget said his key priorities in turning around the country’s economic fortunes include ensuring the Kenya Revenue Authority (KRA) enhances revenue collection by building capacity of the authority to assist in tax collection and seal revenue leakages especially from customs as a result of smuggling and counterfeit.
“The solution to tax mobilization should be targeting the tax collector. KRA is like a cow which we milk without feeding. We have a provision that 2pc of our revenue should go to towards building capacity of KRA but we don’t do it. Look at the system KRA is using now, it needs reengineering,” he stated.
According to the new treasury CS, there is also need to train public tax experts and simplify the tax processes to boost compliance and increase the ratio of tax revenue to Gross Domestic Product to at least 18pc.
“You must have properly trained tax experts. The way we are recruiting KRA staff at the moment and deploying them needs to be relooked into. You cannot have people who are not properly trained to collect taxes from people who hire properly trained accountants to calculate their taxes,” he stated.
In the Financial Year ended June 30, 2024, KRA managed to collect Ksh 2.41 trillion which is 95.5pc of the target.
He also urged the National Assembly to explore climate financing which presents an opportunity to mobilize additional revenue to fund the budget.
“Climate change financing has a lot of money out there. At $1.3 trillion, we must tap into that money to reduce pressure on the budget,” Mbadi noted.
To rein in public debt which has risen to Ksh 10.5 trillion, Mbadi plans to push publication of a tax register which he proposed should be a statutory document.
“Debt accountability is a number one priority for me. As a matter of fact, I have asked myself, if Kenyans owe people money, why can’t Kenyans know the people they own money, how much they owe them and what is the level of interest for each loan,” he said.
To further cut the country’s debt appetite, Mbadi plans to encourage the adoption of Public Private Partnerships (PPPs) to ease public spending on development programme, and tie new loans to specific infrastructure projects.
“My focus is to have commercial debts at no more than 5pc of our external debt portfolio and have 75pc of our debt under multilateral debt and only 20pc on bilateral debt. With that you can clearly reduce the cost of debt,” Mbadi noted.
According to Mbadi, Parliament also needs to criminalize non-payment of pending bills by accounting officers to cut on piling up of non-paid bills which currently stand at Ksh 663 billion.
