Court of Appeal lifts orders on Finance Act 2023

After Treasury CS Prof. Njuguna Ndung’u claimed that the government loses half a billion shillings per day as a result of the freeze, the Court of Appeal removed an order made last month blocking the execution of the Finance Act 2023.
A three-judge panel of the appellate court lifted the June 30 suspension while awaiting the outcome of Prof. Ndung’u’s appeal.
Through Attorney General Justin Muturi, the CS filed a petition with the appellate court, claiming that the government will lose about Ksh211 billion during the current fiscal year.
If the government is not permitted to increase money as suggested in the Bill, Prof. Ndung’u claimed the freeze will make it difficult for the Kenya Kwanza administration to implement the 2023–24 budget as planned and some projects will have to be suspended.
According to the decisions of Justices Mohammed Warsame, Kathurima M’Inoti, and Hellen Omondi, the Finance Act has a 90-day lifespan after which the new budgeting cycle begins.
“There is no question in our minds about the interdependence of the Finance Act and the Appropriations Act. The latter allows for expenditure while the former allows for the creation of the funds. The justices ruled that no expenditures may be made if the method of raising the funds wasn’t considered.”
According to the judges, Prof. Ndung’u projected Ksh211 billion in revenue, at an average of Ksh500 million a day. The judges stated that even if the precise sums are in dispute, it is evident that income was intended to be collected with the Act’s operationalization.
Prof. Ndung’u argued that the government must borrow to close the gap in order to function, hence the court should lift the order that the High Court had prolonged on July 10.
According to Prof. Ndung’u in an affidavit, “the repealed elements of the Finance Act 2022 have the impact of affecting revenue collection and causing service interruptions for already budgeted revenue because there are no saving provisions in the Finance Act, 2023.”
The three judges ruled that taxes are a recurring and annual mechanism and that taxpayers can receive a refund for unpaid taxes and levies when making subsequent tax payments.
The court can consider suspending the specific parts whose execution has an irreversible effect and cannot be undone because the petitions dispute both the overall Act and the specific components, the justices added in their second point.
“This contrasts with suspending the Act in its entirety. Thirdly, the Finance Act-inspired Appropriations Act is in effect and is not facing a constitutional challenge. Finally, the court would have been reluctant to suspend the entire Act, had the trial judge taken into account the significant and irrevocable public interest in this case.” the judges noted.