The 12th Parliament has had its share of successes and setbacks. The sheer volume and diversity of legislation passed by the 12th Parliament demonstrate the effort made by legislators and committees in enacting both consequential and inconsequential government policies. The problem with increased volume is that it adds legal obligations to the already existing legal code, and could lead to inefficiencies. The legislation creates an information access problem that can harm businesses and discourage public understanding of government aims and priorities.
The Kenyan Parliament, established by Article 93 of the Constitution of Kenya 2010, is made up of the National Assembly and the Senate(1).
By debating and passing county-related bills defined in Articles 109 to 113, the Senate serves to represent counties, protect their interests, and enact laws. The Senate also participates in State officer oversight by debating and voting on any resolution to remove the President or Deputy President from office, as provided in Article 145, as well as exercising oversight over national revenue given to county governments and allocating national revenue among counties, as provided in Article 217. The National Assembly, National Assembly represents the constituents and special interests of the people and decides how much money should be appropriated for use by the national government and other national State organs. They are in charge of overseeing the nation’s finances and how they are spent, as well as investigating the President, Deputy President, and other state officials’ conduct while in office and initiating the removal process. The National Assembly also approves war declarations and state of emergency extensions[i].
One of the outstanding issues is the volumetric approach by the 12th Parliament where a specific number of bills were passed without significant oversight or contributions by both members of the Public and the respective stakeholders in each respective field. The consequential bills from that Parliamentary regime were legislations that obviously emanated from the fiscal policy especially spending and taxation proposals.
As shown below, I propose three proposals to help improve the legislative action of the National Assembly and the Senate. These include incorporating evidence into its decision-making processes, focusing its efforts on high-level legislation, and having fewer and more effective statutes.
Changing/improving/establishing a policy must be approached from an evidence-based standpoint. The political economy of policy changes in Kenya over the last few decades confirms the dominance of normative and untested ideas. However, the 2010 Constitution granted Parliament unassailable powers of checks and balances, implying that Parliament retained its role as the primary economic policymaker. However, this role has not been fully utilized, and Parliament has largely ignored its responsibilities, allowing the primary implementation agency, whether it is the National Treasury, Revenue Service, Ministry of Energy, or Health, et al, to dictate the finer details of the policy without providing the evidence required in the Constitution of Kenya and subsequent laws.
A good example is a progressive increase in excise duty on formal sector alcohol, despite the fact that the resulting action raises the cost of alcohol and clearly forces consumers to substitute with informal sector alcohol, the safety of which cannot be guaranteed. While aggressive proposals are still being made, marginal increases in excise duty revenue are becoming scarce. Another example is imposing excise taxes on financial transactions in an economy where financial inclusion and product use are still low in comparison to income. Another example is the lamentations by members of Parliament on the high taxation
Parliament has retained only a small portion of its primary role in fiscal policy, including the approval of spending and taxation proposals. However, one example of how parliament dropped the ball is the failure to thoroughly investigate the relationship between budgets and productivity and economic growth prior to considering estimates of expenditure and revenue, which has resulted in significant policy problems. In any case, the unintended consequences of any fiscal decisions made by Parliament have not been considered. Parisi and Klick (2004) emphasize that the primary hypothesis advanced by positive economic analysis of law is that efficiency is the primary factor shaping common law rules, procedures, and institutions[ii]. As a result, because fiscal policy is primarily driven by the appropriations law and the finance bill, efficiency should be the primary factor shaping its enactment and implementation.
Each resource has an opportunity cost and this includes the lawmaking resources. Whenever lawmaking makes better use of its resources, they are choosing efficient trade-offs. Given the lengthy process of lawmaking, it is important for the leadership of Parliament to prioritize the consequential decisions (bills) that will improve efficiency in the economy, and generate positive outcomes more quickly. Building consensus on fewer but more important policy decisions is far easier and allows Parliamentary leadership to accomplish more than the latter route.
The statute books have become more voluminous and complex in text. Ordinarily, the legal text used in most of these legislations is not easy to read for even literate people. when the legislations become dense, complex and voluminous, its utility value reduces. Its imperative to always simplify this kind of legislation. A simple scan of all tax laws in their entirety, for example, reveals that there are 1266 pages, with custom taxes accounting for the majority of them.
It is critical to review legislation with the goal of increasing efficiency and producing better outcomes for Kenyans, as well as improving overall compliance. Other countries’ statute books have also been systematically simplified. The Australian government recently issued new guidelines for simpler and clearer legislation. Almost every administration in the United States has made deregulation a top priority since the Nixon administration.
Conclusion
Kenya’s parliament has largely ignored its role as the country’s primary economic policymaker. The failure to thoroughly investigate the relationship between budgets, productivity, and economic growth has resulted in serious policy issues. It is critical for Parliament to prioritize consequential decisions that will improve economic efficiency. Having fewer and more effective statutes, focusing on major legislation, and bringing evidence into daily parliamentary decision-making will improve Kenyan lawmaking
[i] Kemboi, Leo Kipkogei. “Are the Interests of the Counties Being Protected in the Fiscal Policy Process Without the Senate’s Input?.” Available at SSRN 4193660 (2022).
[ii] Parisi, Francesco, and Jonathan Klick. “Chicago-Kent Law Review Chicago-Kent Law Review Principles of Lawmaking Principles of Lawmaking,” 2004. https://scholarship.kentlaw.iit.edu/cgi/viewcontent.cgi?article=3898&context=cklawreview.
Occupational licensing is widespread in Kenya, particularly in professions such as law and medicine, and it sparks debate in law and economics. In Kenya, occupational licensing is provided for through a set of statutes. This has implications for markets of legal service provision, which we discuss in this blog. Why is occupational licensing now a […]
It has always been difficult to tie Mr. Trump’s statements to his subsequent policy actions. That fact qualifies any certainty in discerning his implications for Kenya’s macro now. But in three areas, the Kenyan macroeconomic authorities should be on high alert. The Kenya Shilling For much of 2024, the Central Bank of Kenya (CBK)has been […]
In my new paper, “On Efficiency, Equity, and Optimal Taxation: Reforming Kenya’s Tax System,” I examine Kenya’s tax system through the lenses of efficiency, equity, and optimality and recommend policy recommendations. I try to look at how efficiently the system generates revenue without distorting economic activity (efficiency), how fairly the tax burden is distributed across […]
Introduction The Finance Bill 2024 in Kenya sparked a wave of collective action primarily driven by Gen Z, marking a significant moment for youth engagement in Kenyan politics. This younger generation, known for their digital fluency and facing bleak economic prospects, utilised social media platforms to voice their discontent and mobilise protests against the proposed […]
The credibility of Monetary Policy in Kenya is compromised at present by two factors: As we anticipated mid-year, inflation is headed below the target range for the first time; The 7-member Monetary Policy Committee (MPC) has four vacancies. In light of the former prospect, the MPC reduced the Central Bank of Kenya (CBK) Policy Rate, […]
Post date: Fri, Dec 9, 2022 |
Category: Accountability |
By: Leo Kipkogei Kemboi, |
The 12th Parliament has had its share of successes and setbacks. The sheer volume and diversity of legislation passed by the 12th Parliament demonstrate the effort made by legislators and committees in enacting both consequential and inconsequential government policies. The problem with increased volume is that it adds legal obligations to the already existing legal code, and could lead to inefficiencies. The legislation creates an information access problem that can harm businesses and discourage public understanding of government aims and priorities.
The Kenyan Parliament, established by Article 93 of the Constitution of Kenya 2010, is made up of the National Assembly and the Senate(1).
By debating and passing county-related bills defined in Articles 109 to 113, the Senate serves to represent counties, protect their interests, and enact laws. The Senate also participates in State officer oversight by debating and voting on any resolution to remove the President or Deputy President from office, as provided in Article 145, as well as exercising oversight over national revenue given to county governments and allocating national revenue among counties, as provided in Article 217. The National Assembly, National Assembly represents the constituents and special interests of the people and decides how much money should be appropriated for use by the national government and other national State organs. They are in charge of overseeing the nation’s finances and how they are spent, as well as investigating the President, Deputy President, and other state officials’ conduct while in office and initiating the removal process. The National Assembly also approves war declarations and state of emergency extensions[i].
One of the outstanding issues is the volumetric approach by the 12th Parliament where a specific number of bills were passed without significant oversight or contributions by both members of the Public and the respective stakeholders in each respective field. The consequential bills from that Parliamentary regime were legislations that obviously emanated from the fiscal policy especially spending and taxation proposals.
As shown below, I propose three proposals to help improve the legislative action of the National Assembly and the Senate. These include incorporating evidence into its decision-making processes, focusing its efforts on high-level legislation, and having fewer and more effective statutes.
Changing/improving/establishing a policy must be approached from an evidence-based standpoint. The political economy of policy changes in Kenya over the last few decades confirms the dominance of normative and untested ideas. However, the 2010 Constitution granted Parliament unassailable powers of checks and balances, implying that Parliament retained its role as the primary economic policymaker. However, this role has not been fully utilized, and Parliament has largely ignored its responsibilities, allowing the primary implementation agency, whether it is the National Treasury, Revenue Service, Ministry of Energy, or Health, et al, to dictate the finer details of the policy without providing the evidence required in the Constitution of Kenya and subsequent laws.
A good example is a progressive increase in excise duty on formal sector alcohol, despite the fact that the resulting action raises the cost of alcohol and clearly forces consumers to substitute with informal sector alcohol, the safety of which cannot be guaranteed. While aggressive proposals are still being made, marginal increases in excise duty revenue are becoming scarce. Another example is imposing excise taxes on financial transactions in an economy where financial inclusion and product use are still low in comparison to income. Another example is the lamentations by members of Parliament on the high taxation
Parliament has retained only a small portion of its primary role in fiscal policy, including the approval of spending and taxation proposals. However, one example of how parliament dropped the ball is the failure to thoroughly investigate the relationship between budgets and productivity and economic growth prior to considering estimates of expenditure and revenue, which has resulted in significant policy problems. In any case, the unintended consequences of any fiscal decisions made by Parliament have not been considered. Parisi and Klick (2004) emphasize that the primary hypothesis advanced by positive economic analysis of law is that efficiency is the primary factor shaping common law rules, procedures, and institutions[ii]. As a result, because fiscal policy is primarily driven by the appropriations law and the finance bill, efficiency should be the primary factor shaping its enactment and implementation.
Each resource has an opportunity cost and this includes the lawmaking resources. Whenever lawmaking makes better use of its resources, they are choosing efficient trade-offs. Given the lengthy process of lawmaking, it is important for the leadership of Parliament to prioritize the consequential decisions (bills) that will improve efficiency in the economy, and generate positive outcomes more quickly. Building consensus on fewer but more important policy decisions is far easier and allows Parliamentary leadership to accomplish more than the latter route.
The statute books have become more voluminous and complex in text. Ordinarily, the legal text used in most of these legislations is not easy to read for even literate people. when the legislations become dense, complex and voluminous, its utility value reduces. Its imperative to always simplify this kind of legislation. A simple scan of all tax laws in their entirety, for example, reveals that there are 1266 pages, with custom taxes accounting for the majority of them.
It is critical to review legislation with the goal of increasing efficiency and producing better outcomes for Kenyans, as well as improving overall compliance. Other countries’ statute books have also been systematically simplified. The Australian government recently issued new guidelines for simpler and clearer legislation. Almost every administration in the United States has made deregulation a top priority since the Nixon administration.
Conclusion
Kenya’s parliament has largely ignored its role as the country’s primary economic policymaker. The failure to thoroughly investigate the relationship between budgets, productivity, and economic growth has resulted in serious policy issues. It is critical for Parliament to prioritize consequential decisions that will improve economic efficiency. Having fewer and more effective statutes, focusing on major legislation, and bringing evidence into daily parliamentary decision-making will improve Kenyan lawmaking
[i] Kemboi, Leo Kipkogei. “Are the Interests of the Counties Being Protected in the Fiscal Policy Process Without the Senate’s Input?.” Available at SSRN 4193660 (2022).
[ii] Parisi, Francesco, and Jonathan Klick. “Chicago-Kent Law Review Chicago-Kent Law Review Principles of Lawmaking Principles of Lawmaking,” 2004. https://scholarship.kentlaw.iit.edu/cgi/viewcontent.cgi?article=3898&context=cklawreview.
Occupational licensing is widespread in Kenya, particularly in professions such as law and medicine, and it sparks debate in law and economics. In Kenya, occupational licensing is provided for through a set of statutes. This has implications for markets of legal service provision, which we discuss in this blog. Why is occupational licensing now a […]
It has always been difficult to tie Mr. Trump’s statements to his subsequent policy actions. That fact qualifies any certainty in discerning his implications for Kenya’s macro now. But in three areas, the Kenyan macroeconomic authorities should be on high alert. The Kenya Shilling For much of 2024, the Central Bank of Kenya (CBK)has been […]
In my new paper, “On Efficiency, Equity, and Optimal Taxation: Reforming Kenya’s Tax System,” I examine Kenya’s tax system through the lenses of efficiency, equity, and optimality and recommend policy recommendations. I try to look at how efficiently the system generates revenue without distorting economic activity (efficiency), how fairly the tax burden is distributed across […]
Introduction The Finance Bill 2024 in Kenya sparked a wave of collective action primarily driven by Gen Z, marking a significant moment for youth engagement in Kenyan politics. This younger generation, known for their digital fluency and facing bleak economic prospects, utilised social media platforms to voice their discontent and mobilise protests against the proposed […]
The credibility of Monetary Policy in Kenya is compromised at present by two factors: As we anticipated mid-year, inflation is headed below the target range for the first time; The 7-member Monetary Policy Committee (MPC) has four vacancies. In light of the former prospect, the MPC reduced the Central Bank of Kenya (CBK) Policy Rate, […]