Tax hikes can't satisfy thieves' greed or plug holes of wasteful spending

Like a running stomach, no single individual, business or government can escape the wrath of fiscal indiscipline. Not long ago, this column argued that what we have in this country is not a problem of revenues to warrant the toxic taxes and levies of the Kenya Kwanza administration. There will never be enough revenue collections to satisfy the greed of thieves and wasteful entitlements of any government built on kleptocracy.

This week, the country stares at the possibility of a rollback on public investments into key services last seen about three decades ago under the disastrous Structural Adjustment Programs (SAPs). For those who may have missed the full implication of the Treasury’s cutting of capitation for secondary schools by Sh5,344 per student, it does not mean that public schools will miraculously supplement the resulting budgetary hole. Instead, what it means is that the resultant financial gap shall have to be borne by the parents or guardians of the learners.

This is coming at a time when audit reports have exposed billions lost into ghost schools, allocations to non-existent student enrollments and now what is evolving into the signature scandal of the e-citizen heist. Billions more continue to be plundered through multiple bursary schemes under the control of politicians who target the same learners.

While parliamentary oversight has been turned into a den of theatrics that never rresultinto any conclusive accountability measures for the perpetrators, what is least discussed is the opportunity costs to the public.

For instance, assuming the Sh44.8 billion that the Auditor General asserts is unaccounted for is confirmed, this is how the math works for the subsidised secondary education programme that’s on the chopping board at Treasury. If this amount were used to cover the Sh5,334 budgetary cut per learner, it would be enough to pay the deficit for 8,383,234 students. With an estimated 4.1 million learners enrolled in secondary schools in 2023, that means the unaccounted e-citizen money would be enough to cover the deficit for two years.

In the 2025/26 fiscal year, another Sh58 billion has been set aside for the National Government Constituency Development Fund (NG-CDF), the bulk of which is meant to go to the education sector. Since the courts have ruled the Fund is incurably unconstitutional, if this money were channelled directly to subsidise secondary education, it would be enough to fund the deficit treasury alludes to for 10,853,294 learners. Assuming the same enrolment rates for 2023, it means the NG-CDF kitty this year is enough to subsidise the deficit under the program for two and a half years.

Implicitly, therefore, the estimated revenue lost under the e-citizen platform and NG-CDF kitty for the current fiscal year is enough to sustain the subsidised secondary programme at least for the next four years, holding all other factors constant. This proposition sounds logical and a matter of basic common sense. But Treasury mandarins conclude it would not be sustainable to continue with the free basic education initiative that targets primary and subsidises secondary education.

Similarly, university education must suffer the same fate as Treasury claims it does not have the required funds to support learners in higher education through university capitation and the loan scheme that has run for decades under the previous successive regimes.

The troubling questions are: what has suddenly changed under the Ruto administration to warrant all these roll-backs? Does it mean that school enrollments have suddenly outpaced government revenue growth? Or is it a case of misplaced priorities?

If we turned back the clock of time to December 2002, when the then newly elected President Kibaki issued an executive order to initiate and fully implement free primary education (FPE), how much money and fiscal space did he have? From a casual Google search, available data indicates that the Kenya Revenue Authority (KRA) collected Sh183.61 billion against a target of Sh195.86 billion for the fiscal year 2001/02, to return a revenue performance of 94 per cent.

For the fiscal year 2024/25 that has just ended, KRA reports that it collected tax revenue of Sh2.571 trillion, against a target of Sh2.555 trillion, to register a revenue performance of 100.6 per cent. Comparative revenue data by the Controller of Budget (CoB) for the first nine months of the last fiscal year indicate all government revenue classes and debt were on target at an average of over 66 per cent performance for each category, except for external debt.

Unlike today, when some data suggests there are thousands of schools on the verge of closure or merger due to a lack of students, the initiation of free primary education bursts the seams of almost all public schools across the country.

If Kimani Maruge, the Guinness World Record holder of the oldest person to enrol on primary school, were to wake, what would he say about his country, which now threatens to terminate a programme that gave him a chance of a lifetime?

When launching the Sh44.7 billion Linzi Finco bond at the Nairobi Securities Exchange, President Ruto pleaded for leniency in evaluating his performance and time to deliver on his promises before the public judges him. However, the listing of the bond seems to have opened a lid on the real costs of the Talanta Stadium, that has largely been hidden from public scrutiny.

Like any other project initiated under emergency/urgency in response to an impending timeline, what is unfolding is not completely unexpected. Comparative costs of similar stadia in the region and around the world have been trending on social media since the bell rang to start trading of the Linzi bond. If the figures circulating are true, then it appears we shall have one of the most expensive stadiums of a similar capacity and class in the world.

However, what is more troubling is the connecting thread around all these programmes under public scrutiny. According to the President, he must be applauded for taking the bold decisions and attempting to bite too much at the same time, unlike his predecessors. As per this script, these painful measures, while unpopular with the public, are the only means to transform the nation.

Unfortunately, it is in that very script where the weakest link and the connecting thread lie. All the programmes that the Auditor General has flagged as grossly lacking in accountability are a result of executive fiats under the Kenya Kwanza administration. For example, the e-citizen 222222 pay bill under scrutiny was forced on all public entities through an executive coercion in direct contravention of Sections 75 -78 of the Public Financial Management Act, 2012.

In Section 78, KRA is designated as the exclusive collector of national government revenues implied under Article 209(1)(2) and (4). Section 75 confers exclusive powers to the Cabinet Secretary in Charge of the National Treasury to designate, in writing, any other person as a receiver or collector of national revenues implied in Articles 209 or 206. The same Standards apply to County Government entities under Sections 157 -160.

With hindsight from the issues being raised by the Auditor-General, and that which the Public Accounts Committee must address conclusively, who is the designated receiver or collector of the revenues channelled through the 222222 pay bill number? When were they appointed to such a role? This is because anyone who is designated as a receiver or collector of revenue by the CS Treasury must account and report on all revenues collected by them. This is the same opaqueness that has shrouded the Social Health Insurance levy.