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NEWS & CURRENT AFFAIRS

The Nairobian

Supreme Court hands Ruto relief, clears way for Finance Act, 2023

National

By Nancy Gitonga | Oct 29, 2024

President William Ruto's administration has received a major reprieve after the Supreme Court cleared the Finance Act, 2023.

The decision by the seven judges led by Chief Justice Martha Koome allows the government to implement the provisions of the Act, which are essential for tax collection after the Finance Bill, 2024, was rejected.

The court overturned a ruling by the Court of Appeal, which had declared the law unconstitutional.

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Among the provisions of the law was the introduction of new levies intended to enhance the government’s financial resources.

However, shortly after its enactment, the Act faced legal challenges from petitioners including Busia Senator Okiya Omtatah and civil society organisations.

They argued that certain sections violated various constitutional principles and claimed that public participation was not lawfully conducted, particularly concerning 18 new provisions introduced at the committee stage.

In July, the Court of Appeal sided with the petitioners, declaring the entire Act unconstitutional, posing a setback for Ruto in the implementation of his agenda, including the affordable housing project.

The government, aggrieved by the appellate court's decision, urged the Supreme Court to overturn the ruling.

Prof Githu Muigai, representing the Attorney General and the Cabinet Secretary for Treasury, emphasised that the Act was vital for the country’s economic stability and that its invalidation could lead to a fiscal crisis.

He highlighted the Affordable Housing Levy as a significant priority for the government.

"The question of how to enact an effective and constitutionally compliant tax statute is not just an academic exercise but a practical necessity for managing the country’s revenue," he said.

In the ruling, the Supreme Court said public participation was lawfully conducted.

"We find conversely that the legislative process (public participation and concurrence) was in accordance with the constitutional edicts," stated the judges.

They argued that the Bill underwent the concurrence process under Article 110(3) of the Constitution and did not require consideration by the Senate.

The court further upheld two findings issued by the Court of Appeal: it deemed Section 84 (the Affordable Housing Levy) moot and declared Sections 76 and 78 of the Act unconstitutional for being neither incidental nor directly connected to the money Bill, violating constitutional requirements for fiscal legislation.

The judges reaffirmed the principle that legislative amendments must adhere to the stipulated constitutional framework.

The judges also declined a request by the petitioners to compel the government to refund taxes paid while the case was ongoing.

In its judgement, the Supreme Court examined the constitutional implications of the Act, emphasising the importance of its provisions for tax collection and the broader economic framework.

Additionally, the judges recommended that Parliament establishes measures to ensure that all versions of a Bill are accessible to the public at every stage of the law-making process.

A total of 11 petitions had been lodged before the High Court by 49 respondents, all challenging the constitutionality of the Act.