PUBLIC PARTICIPATION IN FORMULATION OF TAX POLICIES

 

Camara Castro Ouma

This paper delves in discussing the principle of public participation during implementation of various tax policies. It provides some of the laws that are likely to be amended through various proposals that have been presented in the Finance Bill 2024. It also explores the sovereign power that belongs to the citizens either directly or through their democratically elected representatives. It focuses on providing analysis of the effects of public participation. From the proposals in the Bill, the paper provides the likely impact that the Finance Bill 2024 is likely to incur to the citizens.



INTRODUCTION

“Democracy is not a spectator sport. It is a participatory event. If we do not participate in it, it ceases to be a democracy.” – Michael Moore.

The Finance Bill 2024 proposes to amend the Public Finance Management Act, Income Tax Act, Value-Added Tax Act, Tax Procedures Act, Excise Duty Act, Miscellaneous Fees and Levies Act, Kenya Revenue Authority Act (Cap. 469) The Bill has raised different concerns from the members of the public as some have even related it to introduction of punitive taxes to the citizens. The concerns of the citizens regarding the Bill can be incorporated only if they participate in the process either directly or through their democratically elected representatives. This paper delves into discussing the essence of public participation in relation to the proposed amendments to various tax laws.

As provided in Article 1, one of the ways of promoting democracy is through involvement of the people who have the sovereign power, incorporation of their ideas in matters that affects them. Introduction of tax directly involves the citizens and there should be consideration of their views. Article 1 of the Constitution of the Republic of Kenya 2010 gives all the sovereign power to the people. This underscores the concept of public participation. It underpins it as a way of involving the people in making of decisions. Articles 10, 35, 118, 119, 124, 201, 221 and 232 have also addressed the principle of public participation.[1] Accessing of information also aids public participation, this is well stipulated in Article 35.

 Participation enhances democracy as the citizens are involved directly or indirectly through their elected representatives. The principles and framework governing public finance is well outlined in Article 201, there has to be openness and accountability and even public participation. Parliament as public institution that makes laws has to be governed by values and principles of public service. Pursuant to Article 232, citizens should be involved in process of policy making.

Every person has a right to petition Parliament to consider any matter within its authority, including to act, amend or repeal any legislation.[2] Petition is basically a prayer, it has to be written and has to be relevant to the subject matter. The Constitution has conferred right to the citizens to participate directly in any legislation. The Petition to Parliament (Procedure) Act No 22 of 2012, provides the procedures to be followed during petition to parliament. Any petition that is submitted to the parliament should be relevant to the subject matter. The citizens must be able to present their claims in meaningful and understandable manner to their deliberators.

The citizens of the republic of Kenya have the right to be involved in matters that affects them, the principle of public participation is no doubt an important aspect of legislation process. In the matter of National Land Commission, the Supreme Court placed the principle of public participation at the core of the concept of checks and balances in governance and execution of various state functions. Principle of Public Participation is a great pillar, it fosters existence of strong democracy in a country and also signifies good governance, determination of democracy is through involvement of the people.

Implementation of various tax policies in the country affects inter-state migration, business community, innovation, investment and also the cost of living. For instance, payroll taxation affects companies’ decisions to hire. When there is increase of taxes, it affects the citizens and also it is a threat to employment in the country. However, the various stakeholders, can present petitions to parliament so as to avoid the threat to employment and loss of jobs. Introduction of various policies in the Bill are likely to affect the citizens. The views of the citizens towards the Finance Bill 2024 can only be addressed if the citizens participate in every stage of the process, submissions of memoranda both to the Parliament and even through their elected representatives.

Lack of prescribed legal framework for public participation is no excuse for not conducting public participation; the onus is on the public entity to give effect to this constitutional principle using reasonable means.[3]

Effects of Public Participation in formulation of tax policies.

Public participation promotes inclusivity in representation, the citizens are widely consulted so as to give out their views in relation to proposed legislations. Their views have to be put into consideration. It is only achieved if the members of the public are involved in every stage of implementation of tax policies. Their divergent views should not be understated. Involvement of people empowers democracy in the society, it fosters the pillars of a democratic country.

Promotes openness and accountability. Principle of public participation promotes involvement, it spearheads the transparency of the process, when participation is done, the formulations are effective since they are not self-centered. It is a principle that leads to equity and fairness, when effective participation is done there is non-discrimination of the citizens during formulation of the policies.

CONCLUSION

The principle of public participation during formulation of various tax policies is essential. The Finance Bill 2024 entails different proposals that are likely to affect the tax laws in the country. For instance, the integration of Tax Invoice Management System (TIMS) and Electronic Tax Invoice Management System (ETIMS) has not been rapid in the country, implementation of such policy will be costly to the citizens and even unbearable.

The bill proposes to do away with different exemptions that are likely to discourage investment in the country. The Bill is likely to reduce consumption of some services. If public participation for the Finance Bill 2024, is done differently and effectively, maybe it can lead to outcomes that are not unbearable to the citizens. Introduction of Excise Duty on vegetable oils, is likely to increase the cost of the commodity which will lead to increase in cost of living. The members of the National Assembly should implement public participation in the formulation of tax policies in the Finance Bill 2024 with goodwill.

 



[1] Articles 1, 10, 35, 118, 119, 124, 201, 221 and 232 of the Constitution of Kenya 2010.

[2] Article 119 of the Constitution of Kenya.

[3] British American Tobacco Kenya, PLC V Cabinet Secretary of Ministry of Health & 2 Others; Petition No. 5 of 2017.

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