Beyond the Finance Bill: Kenya's real Budget debate is about spending

Just when we thought we had seen it all, we were all left in shock by the violent disruption of a post-Budget event being held on church premises at the end of last week. As is becoming more and more common in our increasingly violent pre-2027 election moment, “goons” were fingered for blame, and we now have the usual posturing from officialdom about ongoing investigations.

With what already looks like an exciting football World Cup coming as a welcome public distraction from our daily political shenanigans, you would have thought that this is exactly the time for the government to get its head down and do some real work silently and quickly.

For example, after last week’s Budget Statement, both the 2026/27 Appropriations Bill and 2026 Finance Bill are on this week’s National Assembly agenda, as they slowly make their way into law. There is more to their agenda, but these two bills offer a firm reminder that the second anniversary of June 25, 2024, is coming up in just nine days’ time.  So, it’s a time for calm heads.

Which is not to say our 2026/27 budget debate is over. Let’s begin with a Finance Bill, which seems to be progressing with more twists and turns than the shifting loyalties of our political class.  From clarifications on enforcement of tax collections in dispute to the “on-off” expansion of PAYE tax bands to VAT on mitumba importation but not domestic sale to VAT on digital financial platforms but not services (or is it the other way round?), the final report from the National Assembly’s Finance and Planning Committee will definitely make for interesting reading.

I think we overinvest in debating annual legal tinkering over the tax regime as a whole.  Including EAC customs, we are fighting over Sh98.9 billion (not Sh120 billion) in new tax measures in a Sh2.86 trillion tax target, which is 10 per cent up from this year’s Sh2.6 trillion estimate.  Now throw into this mix recent Auditor-General revelations, in commenting on the bill, that KRA is currently sitting on about Sh2.72 trillion, a year’s tax take in past tax arrears.  But I digress.

The danger in the coming days is that the Finance Bill again becomes a lightning rod for public protests.  How the Committee delivers its final report, especially in better acknowledging, if not necessarily agreeing with, stakeholder inputs than it has done in the past, will fuse or defuse the way forward.  There’s the second reading of the bill on Tuesday, but will it also be rushed to finalisation this week?

As always seems to be the case, the Appropriations Bill will have a smoother ride. Again, to report a common theme, we have historically underinvested in interrogating our spending plan.  Part of the reason for this is that Parliament’s public participation in expenditure is fairly remote to ordinary Kenyans.  Actually, the closest we get to spending is the Treasury’s annual Sector Hearings.

Yet, whether or not these come to the floor of the House, we have recently seen alternative or shadow budgets being presented to the public.  While not as detailed as the official budget documentation, the Treasury’s sharp retorts about the lack of “data simulations” have offered us new food for thought on our budget challenges, especially from the spending side.

Let’s examine a couple of these thoughts.  The guiding position is the government’s 2026/27 spending total of Sh4.82 trillion (recurrent Sh3.568 trillion, development Sh750 billion, counties Sh520 billion) against a revenue and grants total of Sh3.67 trillion, leading to a deficit of Sh1.15 trillion or 5.5 per cent of GDP.  Against this, the united opposition’s alternative “people’s budget” spends Sh4.32 trillion, with revenue of 3.73 trillion; a deficit of around Sh590 billion (2.8 per cent of GDP).

How do they get to this picture?  Slightly lower but supposedly better targeted education spending, higher spending on healthcare while cancelling the long-term SHA ICT contract, more on agriculture and jobs for the youth, savings from rightsizing State House and the National Intelligence Service, as well as the stoppage of non-priority “vanity” projects, a flat rental tax for large landlords and proceeds from the sale of stalled affordable housing projects at market price. To be clear, these are just some of the ideas proposed, which include stopping the housing levy.

The Office of the Citizen, a civil society initiative, also proposed an alternative “people’s budget”, setting a spending cap of Sh3.96 trillion based on a revenue projection of 3.35 trillion and a 3 per cent fiscal deficit (Sh567 billion).  Driven by Article 203(1) of the constitution, their budget proposal is built on the prioritisation of national interests before national debt.  Citizens' priorities under their framework would include education first, health access, food security, youth empowerment, gender equity, reduced size of government, lowering oil (fuel) taxation and exploring wealth taxation.  Included in their rationalised budget is Sh800 billion from closing down corruption and other waste and leakages, listed to include presidential travel and advisors, as part of a working zero-based budgeting framework.  Separately from these two “people’s budgets”, two opposition parties, PLP and DCP, had earlier offered their alternatives; both targeting strict programs of austerity and redistributions to new programs in areas like agriculture.

Notably, all of these alternative budgets had issues, even viscerally, with the Finance Bill.  But more importantly, the consensus remains that our problem rests in spending and the economy.  We can go on and on about budget credibility and data realism, but isn’t this the debate itself?

To repeat, the devil is always in the detail, so, for example, given Kenya’s debt-financed growth proclivity, at least until we move to investment-led growth, would these budget shifts inflict short-term economic pain, even if they target long-term gain?  What would be the effect, as proposed by one party, of a complete shutdown of domestic borrowing for the broader financial sector?  These are the issues we should be debating, especially for an economy so government-reliant.

So, is our 2026/27 budget debate over?  As an institutional formality, yes!  While these alternative budgets have offered a different view, whether we agree with them or not, the best places for budget influence come earlier in the cycle: the November-December Sector Hearings are where to propose deep technical changes to the budget, on finances as well as performance, while the February Budget Policy Statement is where the politics that drives the budget is settled.

But it is still fair to conclude from these alternatives that budget debate is getting better, “goonism” aside, even as the Appropriations and Finance bills eventually pass.  This shouldn’t be a bad thing that Treasury and the rest of the government scoff at, but a good one that they embrace.