Kenya’s Court of Appeal has nullified the government’s 2023 finance law, declaring it unconstitutional. This decision marks another setback for President William Ruto, whose administration has faced growing challenges and public discontent. The ruling followed the government’s withdrawal of this year’s finance bill after violent protests erupted over the controversial tax measures.
The finance bills, introduced annually to parliament, are crucial for the government to outline its revenue-raising strategies. These bills typically include tax increases and the introduction of new levies. The 2023 finance law faced immediate backlash, with opposition-led street protests turning violent. The law sought to double the value-added tax on fuel, introduce a housing tax, and increase the top personal income tax rate, among other measures.
The Court of Appeal’s decision came after an appeal against a previous High Court ruling, which had largely upheld the finance bill but struck down the housing levy. The three-judge bench stated, “A further declaration is hereby issued that the failure to comply with this constitutional dictate renders the entire Finance Act, 2023 unconstitutional.” This judgment highlights the court’s stance on the importance of constitutional compliance in legislative processes.
Following the High Court’s ruling, the government had pushed through new legislation to continue collecting the housing tax. This new law is also currently being challenged in court. The nullification of the 2023 finance law creates a legal vacuum, as the government has been relying on it to collect taxes after President Ruto withdrew this year’s finance bill.
The government’s immediate response to the ruling was muted, with no comments from key officials. The office of Chief Minister Musalia Mudavadi and the top finance ministry official, Chris Kiptoo, did not respond to requests for comments. The government has the option to appeal the Court of Appeal’s decision to the Supreme Court, Kenya’s highest judicial authority.
Ruto has consistently defended the higher taxes, arguing that they are essential for funding development programs and servicing Kenya’s substantial public debt. The country’s debt levels exceed the recommended thresholds set by the International Monetary Fund (IMF) and the World Bank, adding to the economic pressures facing the administration.
The government’s financial strategy has involved submitting a new economic plan to the IMF. The plan outlines measures to stabilize the economy while addressing the debt crisis. The IMF board is expected to review this plan at the end of August. The outcome of this review could have significant implications for Kenya’s economic future and the government’s ability to implement its fiscal policies.
