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Treasury plans to use new taxes to pay illegal Sh1t debt, says Omtatah

Busia Senator Okiya Omtatah. He claims the Finance Act, 2023, is unconstitutional. [Elvis Ogina, Standard]

The Kenya Kwanza Government intends to borrow Sh211 billion to plug the deficit created by the suspension of the Finance Act, 2023.

In an appeal application, Treasury Cabinet Secretary Njuguna Ndung’u and Attorney General Justin Muturi have asked the court to lift freeze orders issued by High Court judge Mugure Thande.

The government claims failure to collect the new taxes will force it to borrow to finance its Sh3.6 trillion budget.

“The Government of Kenya stands to lose approximately Sh211 million in the Financial year 2023/2024. This means that the government will not be in a position to implement the 2023/2024 budget as planned, it has to borrow more hence increasing the national debt. This will also cause a rise in the rate of inflation,” says Prof. Ndung’u.

The CS also argues that it will take time before Chief Justice Martha Koome appoints a three-judge bench to hear the 12 High Court cases.

However, Busia Senator Okiya Omtatah has asked the same court not to lift the orders.

The Senator alleges that the government has already illegally borrowed Sh1 trillion and its intention is to pay up the debt with the hiked taxes. He states the money borrowed locally has not been used for development as intended by the law.

“I am aware that the Finance Act, 2023, contains measures to collect tax revenues that will in part be used for repayment of unlawfully borrowed domestic debt amounting to Sh1 trillion. I am aware that the money the government is going to ‘lose’ is money to repay illegal debt. And they do not want the case to go to full hearing so that they can conceal this fraud to the Kenyan taxpayer,” says Omtatah.

Omtatah is of the view that if the court lifts the orders his case will be rendered useless.

The senator sued alongside Eliud Matindi, Michael Otieno, Blair Angima, Victor Okuna, and Florence Kanyua, arguing that it will be unfair to force Kenyans to pay taxes while there are doubts about whether the new law is constitutional.

“If the conservatory orders are lifted, the Finance Act, 2023... will come into force and allow the government to compel Kenyan taxpayers to pay unconstitutional tax,” Omtatah says in his reply.

He says the government should be content with the revenues it will collect under Finance Act, 2022.

“Further, revenue from loans and grants for development has already been captured in the development expenditure estimates which are authorised under the Appropriation Act 2023, which is not suspended,” he argues. 

Justice Koome has already appointed Justices David Majanja, Lawrence Mugambi and Christine Meoli to hear the cases.