Court suspends Finance Act

The High Court temporarily suspended the Finance Act 2023 last evening, giving Kenyans a cause to breath easy and with hope despite the decisions being a significant blow to the government.
The Treasury’s proposal to achieve the Ksh3.6 trillion budget via increasing taxes. After the law increased the fuel charge from 8% to 16%, the Energy and Petroleum Regulatory Authority had just announced new petroleum rates.
When this action is slated to be mentioned for directions on July 5, 2023, Justice Mugure instructed, “I am satisfied that the application meets the test for conservatory orders and I do grant prayers two and three of the application until that date.”
Attorney General Justin Muturi’s legal acumen will be put to the test in five cases that so far challenge the law.
After the Finance Bill was passed into law by the Kenya Kwanza legislative majority, it is now the job of the attorney general to persuade judges that some of the contentious provisions of the bill, like the housing fee imposed on paid staff, are permissible.
The challenges to the new law will be Muturi’s first significant challenge, as he must decide whether to defeat President William Ruto’s government’s plans to extort more money from workers or to smile as the court approves the move to further loot taxpayers’ purses.
Following Dr. Ruto’s approval of the Bill’s passage into law, the Law Society of Kenya, Omtatah, Peter Agoro, Dr. Paul Saoke, Clement Onyango, and the Association of Alcoholic Beverages each filed a separate lawsuit.
Looking at the cases, it is clear that the method of passing the Bill into law and the overall impact of the measures on Kenyans are the main points of contention.
LSK contends that MPs disregarded the law, especially the requirement of public engagement. The lobby claims that the government broke several provisions of the Constitution, making the entire bill unconstitutional.
Senator Omtatah is also displeased that the National Assembly failed to obtain the Senate’s approval before drafting the Bill.
He contends that on June 15, National Assembly Speaker Moses Wetang’ula received a protest from Senate Speaker Amason Kingi about the lower house’s failure to study and debate the Bill.
Omtatah claims that because the current Finance law deals with county governments and was a money issue, senators had to agree before the lower house could discuss and approve it.
Omtatah takes aim at the whole thing.
He asserts this in a case he filed with Eliud Matindi, Michael Kojo, Benson Otieno, Blair Angima, Victor Okuna, and Florence Kanyua. “The entire Finance Bill, 2023 collapsed, and so did the resultant Finance Act, 2023, for having not been subjected to the concurrence of the two Speakers of Parliament under Article 110(3) of the Constitution,” they write.
He argues that because the statute has actually affected other laws, both houses must change it. He has pointed to the 1.5% home tax and the increase in the gasoline tax from 8% to 16% as two particularly harsh provisions added to the new law without consulting the public.
Agoro claims there was misunderstanding as to whether the Kenya Kwanza government desired a contribution that would be administered by a fund or a housing fee that would be returned after seven years.
He also contends that the administration should have abandoned the 1.5% levy plan because it was opposed by a resounding majority of Kenyans who participated in the discussion.
He claims that as a result, the employees will be worse off than they were.
“The controversial proposal for the 1.5% housing levy directed toward the State’s housing project has increased popular dissatisfaction with the Bill. Many provisions of the Bill are obviously illegitimate and unconstitutional, burden citizens and the public unfairly, and impede investment and progress,” according to Agoro.
In order to remove the provisions of the new law that Kenyans believe are burdensome on their finances, he wants the court to order Parliament to make the necessary amendments.
Although the Bill was the subject of public comment and received complaints, he claims that what was brought to the August House was not representative of the opinion of the majority of Kenyans.
Agoro lists more excesses implemented by the Kenya Kwanza government in the new law, including taxes on human hair, wigs, false beards, eyebrows, eyelashes, and artificial nails.
The other case is by Onyango
According to his attorney Alex Kimtai, the Finance Act 2023 violates the rights of the majority of Kenyans to food security, sovereignty, and property as well as the principles of fair taxation.
Kimtai sought Justice Mugure Thande to certify the case as one requiring more than one judge to decide since it is of public interest.
The housing tax and the requirement that a petitioner make a 20% deposit of the tax under issue in order to be permitted to appeal are among the clauses that Onyango’s attorney criticizes in the case.
According to Kimtai, it is difficult to put the new law into effect without also breaking other laws.
Onyango has filed lawsuits against the National Assembly, Attorney General, and Treasury Cabinet Secretary Prof. Njuguna Ndung’u.
He has also enlisted the Consumer Federation of Kenya (Cofek) and the Law Society of Kenya as interested parties.
According to Kimtai, “Amendments of various laws and the Respondents’ conduct as set forth in the petition are manifestly unlawful and affect the rights of the People of Kenya.”
Another petitioner who has objected to the new law is Dr. Saoke. He claims that the current Finance law is the result of misleading Kenyans in his lawsuit, which was filed by Rachiel and Amollo Company attorneys.
He claims that during the 2022 campaigns, President Ruto persuaded Kenyans to support him by promising, among other things, to reduce living expenses, combat corruption, and eliminate the harsh fuel tax that the Jubilee administration had enacted.
He asserts that the Bill put out by MP Kuria Kimani was completely at odds with what the Kenya Kwanza administration had promised Kenyans.
“That false dawn in 2023 crushed when a stunning turnaround by the said regime on 4 May, 2023 dawn one Hon Kimani introduced the Finance Bill 2023 to the National Assembly for its first reading,” the author writes.
He claimed that it was unfair for MPs to approve the Bill even though Kenyans were strongly opposed to it. He also takes issue with the way Wetang’ula ran the meetings.
According to Dr. Saoke, it was illegal to expel some Azimio la Umoja One Kenya Coalition members because they were merely expressing their displeasure.
He continues, “The Finance Bill, 2023 was not only procedurally introduced to and passed by the National Assembly, but it also substantially violates substantive provisions of the Constitution.”
The Public Finance Act and Standing Order No. 244 of the National Assembly, which both require the Treasury CS to first present the budget policy and revenue-raising plans, are other arguments made by Dr. Saoke that the procedure was defective.
He claims that the recommendations are then condensed into a Finance Bill and presented to Parliament.
He contends that “the respondents disregarded such express provisions and instead unconstitutionally presented the Finance bill and then the budget.”
Regarding the housing levy, he claims that the government has not clarified how it plans to use it or how it will distribute dwellings to millions of homeless Kenyans.
The current legislation, he continues, shields the government from criticism in the event that the funds allocated for affordable housing are not really used for the program.
“The petitioner questions the wisdom and intention of the housing levy/tax in the Finance Act 2023 since the government in its budget for 2022-2023 had an allocation for affordable housing just from taxes from that year and did not overburden Kenyans,” he adds.
He claims that MPs added at least 16 provisions without consulting the public, and he adds that Kenya Kwanza should have implemented austerity measures to protect Kenyans from difficult economic conditions.
Additionally, Dr. Maosi requests that the court rule the entire Act to be unconstitutional.