Kenyan taxpayers have suffered a major setback and a big win for government following today’s landmark ruling by the Supreme Court overturning Court of Appeal decision declaring the controversial Finance Act 2023 unconstitutional in its entirety.
On the flip side, it is a big sigh of relief for the government, as the National Treasury will now continue to collect the revenues it had targeted after it was forced to fall back to the Act following the rejection of the Finance Bill 2024 after weeks of Gen Z protests.
The Court of Appeal had declared the Act in its entirety unconstitutional, null, and void, citing a lack of public participation.
However, today, the seven-judge Supreme Court bench led by Chief Justice Martha Koome dismissed the appeal on grounds that there is no law governing public participation.
The apex court judges declared several sections of the Act unconstitutional, emphasising the need for adherence to legislative processes and public participation requirements.
“The bill was subjected to public participation which was adequate and satisfactory taking into account the circumstances of enacting a Finance Act. To this extent, we find there was no basis to declare the entire act unconstitutional.” The judges ruled.
The court further admitted to a lacuna in law governing the public participation process, stating that “Parliament ought to put in place a legislative framework to regulate the process of public participation as envisaged under the Constitution.”
“Parliament ought to put in place measures to ensure that all versions of a bill, at every stage of the law-making process, are accessible to the public for their information and scrutiny.” The ruling reads in part.
This decision, following a lengthy legal battle over the government’s appeal regarding the Act’s legality, sets forth crucial recommendations aimed at enhancing transparency and accountability.
The Supreme Court delivered a landmark judgment on the controversial Finance Act, 2023, addressing the government’s appeal regarding its legality. While the court upheld parts of the law, it also emphasized the need for improved public participation in the legislative process, setting forth crucial recommendations aimed at enhancing transparency and accountability.
In the ruling, the Supreme court overruled the Court of Appeal’s declaration that the entire Finance Act, 2023, was unconstitutional. However, the seven judges of the apex court, led by Chief Justice Martha Koome, did uphold significant findings, declaring sections 76 and 78—related to the Kenya Roads Act—and section 87—concerning the Unclaimed Financial Assets Act—as unconstitutional.
The court’s decision highlights the importance of legislative compliance, particularly regarding the provisions of a money Bill. Notably, the court deemed the issue surrounding the Affordable Housing Levy debatable, thereby avoiding further controversy on that front.
The Supreme Court further urged parliament to establish a statutory framework for public participation and ensuring that every version of a bill remains accessible to the public throughout the legislative process. The court also stressed that reasonable measures must be in place for considering public input, reinforcing the necessity of transparency and accountability in lawmaking.
The 53 respondents at the apex court, led by Busia Senator Okiya Omtatah, had argued that the decision by the Court of Appeal to declare the law unconstitutional was the right position, stating that the process was rushed and did not consider all the views from Kenyans.
The Court of Appeal ruled the Finance Act 2023 unconstitutional on July 31, 2024, stating that Parliament failed to provide reasons for accepting or rejecting public proposals.
The net effect of the Supreme Court decision now means that Kenyans will continue paying more taxes introduced in the contentious Finance Act 2023, which led to deadly nationwide protests, including the 16% VAT on fuel, the housing levy, and more pay-as-you-earn tax, among others.
The appeal was filed by the Cabinet Secretary for Treasury and National Planning, the Attorney General, the National Assembly, the Speaker of the National Assembly, and the Kenya Revenue Authority against 53 other respondents, including Busia Senator Okiya Omtatah, challenging the July 31, 2024, Court of Appeal judgment.