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Government and Policy

How To Read And Understand Chapter 12 Of The Constitution On Public Finance

BY Juma · October 28, 2020 08:10 am

Chapter 12 of the Constitution of Kenya deals with public finance. The Chapter breaks down and outlines the principles and frameworks that govern public finances.

Article 201 (a) says that “there shall be openness and accountability, including public participation in financial matters.” it also says that “the public finance system shall promote an equitable society” in matters such as equally sharing the burden of taxation.

Many Kenyans rarely read this Chapter because of the terms used and failure to understand the applicability of the Chapter in real life. It is even not clear whether the Government of Kenya is aware of the existence of this Chapter as it always does the opposite.

Economic Analyst Kwame Owino says that the Public Expenditure, for instance, as outlined in Chapter 12, comprises of five things:

Direct government purchase

Tax Expenditures

Contingent liabilities

Subsidies

Transfers

According to Mr. Kwame, Direct purchases are things that the government of Kenya pays for directly through public procurement and includes wages. Tax expenditures are tax waivers that the government gives to a firm or industry and represent foregone revenue.

READ: Kenyan Constitution, Chapter Twelve, Part 2, Article 206 to 208

On the other hand, Contingent liabilities or guarantees are given by the government of Kenya on behalf of state corporations or other departments of government.

Subsidies are spending that the government of Kenya offers to an industry or business to support its operations or keep the prices of services or goods down.

Transfers are payments made by the government for which no goods or services are provided. Transfers can be like the support of failing sugar and airlines from public revenues.

READ: Kenyan Constitution, Chapter Twelve, Part 1, Article 201 to 203

It is important to note that the whole of Chapter 12 of the Constitution is dedicated to the economy of Kenya. It is like a roadmap to the growth of the economy.

Juma is an enthusiastic journalist who believes that journalism has power to change the world either negatively or positively depending on how one uses it. (020) 528 0222 or Email: info@sokodirectory.com

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