Blow to Ruto as High Court bars implementation of Budget taxes

Kenyans have a reason to breathe ease and hope after the High Court has temporarily suspended the Finance Act 2023.

Justice Mugure Thande ordered the government not to implement the new law until the application filed by Busia Senator Okiya Omtatah is mentioned on Wednesday for further directions.

The orders are a major blow to National Treasury's plan to raise more taxes to implement the Sh3.6 trillion budget. The Energy and Petroleum Regulatory Authority (EPRA) had just introduced new petroleum prices after the law raised the fuel levy from 8 per cent to 16 per cent.

"I am satisfied that the application meets the test for conservatory orders and I do grant prayers two and three of the application until July 5, 2023, when this matter is scheduled for mention for directions," Justice Mugure directed.

So far, five cases challenging the law will put to test Attorney General Justin Muturi's legal wit.

After Kenya Kwanza's parliamentary majority had their way by passing the Finance Bill into law, it is now for the AG's turn to convince judges that some of the controversial clauses in the law, such as the housing levy imposed on salaried employees are legal.

The cases against the new law will the first major test for Muturi, as he will either sink President William Ruto's government's ambitions to collect more money from employees or will retain smiles as the court Okays the move to further raid taxpayers' pockets.

The Law Society of Kenya (LSK), Omtatah, Peter Agoro, Dr Paul Saoke, Clement Onyango and the Association of Alcoholic Beverages have filed separate cases after Dr Ruto assented the Bill into law.

A glance at the cases indicates that the major dispute is on the process of enacting the Bill into law and the net effect of the proposals to Kenyans.

LSK argues that MPs failed to adhere to the law, including public participation. According to the lobby, the government has violated several parts of the Constitution, thereby making the entire law unlawful.

Senator Omtatah is also aggrieved that the National Assembly never sought concurrence from the Senate while preparing the Bill.

He argues in his case that Senate Speaker Amason Kingi on June 15 protested to his National Assembly counterpart Moses Wetang'ula for failing to submit the Bill to the upper house for consideration and debate.

According to Omtatah, the now Finance law touches on county governments and was a money bill, therefore, it required consensus from Senators before it was debated and passed by the lower house.

Omtatah targets the entire document.

"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," he argues in his case filed alongside Eliud Matindi, Michael Kojo, Benson Otieno, Blair Angima, Victor Okuna and Florence Kanyua.

On the other hand, Agoro takes a different bout against the Bill.

His argument is that the law has in effect touched other laws that needed amendment by both houses. He has cited the 1.5 per cent housing levy and increase of fuel levy from eight to 16 per cent as some of the draconian measures introduced in the new law without public participation.

According to Agoro, there was confusion about whether the Kenya Kwanza government was after a housing levy that will be refunded after seven years or a contribution that would be managed by a fund.

Further, he argues that the government should have dropped the 1.5 per cent levy idea as the supermajority of Kenyans who were engaged were against it.

He asserts that the net effect is that employees will be left poorer than before.

"The public disaffection against the Bill is compounded by the controversial proposal for the 1.5 per cent housing levy geared towards State's housing project. Various parts of the Bill are manifestly unconstitutional and illegal and place an undue burden on citizens and the public in general and hinders growth and investment," says Agoro.

On his end, he wants the court to force Parliament to amend the new law in order to remove parts that Kenyans feel are a pain to their pockets.

He states that although the Bill was subjected to public participation and received objections, what was presented before the August House was different from the voice of the majority of Kenyans.

Agoro also cites taxing human hair, wigs, false beards, eyebrows, eyelashes and artificial nails as some of the extremes that the Kenya Kwanza government introduced in the new law.

The other case is by Onyango.

His lawyer Alex Kimtai argues that the Finance Act 2023 infringes on the right of the majority of Kenyans to food security, their sovereignty, and their right to property and a violation of fair taxation principles.

Kimtai urged Justice Mugure Thande to certify the case as one of public importance and requiring more than one judge to determine.

In the case, Onyango's lawyer targets among other clauses, the housing tax and the requirement for a litigant to deposit 20 per cent deposit of tax in dispute in order to be allowed to appeal.

Kimtai argues that it is impossible to implement the new law without violating other laws.

Onyango has sued the National Assembly, Treasury Cabinet Secretary Prof Njuguna Ndung'u and the Attorney General.

He has also roped in the Law Society of Kenya (LSK) and the Consumer Federation of Kenya (Cofek) as interested parties.

"Amendments of various laws and the actions of the Respondents as set out in the petition are manifestly unconstitutional and unlawful, affecting the rights of the People of Kenya," Kimtai says.

Dr Saoke is another petitioner who has voiced his dissent against the new law. In his case filed by Rachiel and Amollo Company advocates, he argues the current Finance law is a product of deceit to Kenyans.

According to him, President Ruto, during the 2022 campaigns, wooed Kenyans to vote for him on the promise to lower the cost of living, deal with corruption and scrap the punitive fuel levy introduced by the Jubilee administration, among other promises.

He says that the Bill presented by MP Kuria Kimani was the exact opposite of what the Kenya Kwanza government promised Kenyans.

"That false dawn in 2023 crushed when a stunning turnaround by the said regime on May 4, 2023 dawn one Hon Kimani introduced the Finance Bill 2023 to the National Assembly for its first reading," he states.

According to him, it was unfair for MPs to pass the Bill into law despite Kenyans vehemently opposing it.

His grievance is also about how Wetang'ula conducted the sessions.

Dr Saoke is of the view that the decision to kick out some members from Azimio la Umoja One Kenya Coalition was against the law as they were just expressing their discontent.

He further states: "The Finance Bill, 2023 was not only procedurally introduced to and passed by the National Assembly but also substantially violates substantive provisions of the Constitution."

Dr Saoke also argues that the process was flawed as the Public Finance Act and National Assembly's Standing Order No 244 requires the Treasury CS to first present the budget policy and revenue-raising measures.

The proposals, according to him, are then reduced and framed into Finance Bill and presented in Parliament.

"The respondents ignored such express provisions and instead unprocedurally presented the Finance bill and thereafter presented the budget," he argues.

On the housing levy, he argues that the government has not explained how it intends to apply it and how it will allocate millions of houseless Kenyans the houses. He further argues that the current law is opaque and insulates the government from scrutiny in the event the money for affordable housing is not utilised for the programme.

Dr Maosi also wants the court to declare the entire Act unconstitutional.

newdesk@standardmedia.co.ke