Win for Gov't as Supreme Court affirms legality of Finance Act 2023

The Supreme Court has overturned the decision by the Court of Appeal to declare the Finance Act 2023 unconstitutional.

The Court of Appeal had declared the Act in its entirety unconstitutional, null, and void, citing a lack of public participation.

However, the seven-judge Supreme Court bench dismissed the appeal on grounds that there is no law governing public participation.

In their judgment, the Supreme Court judges led by Chief Justice Martha Koome said: “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 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.”

The court further ruled that: "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 judges further held that Parliament should put in place reasonable measures for the consideration of proposals, views, suggestions, and comments received during a public participation exercise.

Questions on the threshold of public participation have been a subject of ongoing litigation, with Parliament still in the formative stages of enacting the law, which was last at the Attorney General’s desk for advice.

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.

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 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.