High Court freezes Finance Act 2023

President William Ruto assenting to the Finance Bill, 2023 as leaders witness at State House on June 26, 2023. [PCS]

The High Court has dealt the Kenya Kwanza government a major blow by affirming its orders to freeze the Finance Act, 2023.

At the same time, the court has certified the cases filed for hearing by more than three judges to be appointed by Chief Justice Martha Koome.

Justice Mugure Thande, in her ruling, stated that she was not convinced by Attorney General Justin Muturi, Senate, National Assembly and Kenya Revenue Authority (KRA) who wanted her to lift the orders she issued last week suspending the implementation of the new budget law.

The judge was of the view that while weighing between the inconveniences President William Ruto's government would undergo and the suffering that Kenyans would have to endure if the law is found to be unconstitutional, the latter was the lesser evil.

She stated that the petitioners - Busia Senator Okiya Omtatah, Peter Agoro, Dr Paul Saoke, Eliud Matindi and Clement Onyango - had made a case that there were legitimate concerns on the constitutionality of the Act.

“Suffice to say, upon evaluation, I have no difficulty finding that there is a prima facie case and if the substratum of this case is not preserved, it will then render the case an academic exercise. The prejudice to be suffered by Kenyans outweigh the prejudice to be suffered by the government,’ said Justice Thande.

Immediately the judge handed her verdict, senior lawyer Kiragu Kimani, for the AG urged her to suspend the ruling for a period of between seven and 10 days in order to allow his client to Appeal.

He claimed that the net effect of the orders was to cripple the government.

Meanwhile, Justice Mugure directed the file be placed before Chief Justice Martha Koome to empanel a three-judge bench to hear the case. 

She stated that the matters raised were of public importance and raised serious constitutional issues that needed an uneven number of judges to settle.

“This is to hamstring the government and making it impossible for it to function as required by the Constitution. The request is that you suspend the conservatory orders for a period of seven to 10 days to allow the respondents to move to the court of appeal,” argued Kiragu.

The National Assembly, Senate and KRA backed the senior lawyer’s argument.

However, senior lawyer Otiende Amollo urged the judge to disregard the new plea. He accused the two arms of government and KRA of trying to steal a match through the back door.

He asserted that if the court suspends its orders, the government will go ahead and tax Kenyans even before the court determines whether the new law is Constitutional or not.

Amollo, who is also the Rarieda MP stated that the claims raised were similar to what the Executive, Parliament and KRA had initially submitted adding that the government had not collapsed for the 12 days that the initial orders were in place.

"It is 12 days since you suspended the Finance Act 2023 and the government has not shut down. Our colleagues should stop scaremongering. The law provides for mechanisms of continuity through the Finance Act 2022. All that has stopped are the new taxes and levies,’’ said Otiende.

He urged Justice Mugure to stick to her orders.

While supporting Amollo’s argument, Omtatah told the court that the AG was indirectly asking her to overturn the ruling she had just handed.

According to the Busia Senator, there was nothing new that had been raised to warrant her intervention.

After listening to the rival arguments, Justice Mugure dismissed the fresh application. She stated that Kenyans are likely to suffer if she lifts her orders for seven days.

On one hand, those opposed to the implementation of the new Act argued that it is impossible to tell how the Kenya Kwanza administration will spend the money collected from taxpayers as it did not present its revenue estimates to Parliament for approval.

The petitioners led by Omtatah argued that MPs illegally sneaked in 22 clauses in the Finance Act 2023.

On the other hand, the Attorney General and KRA argued that the government will lose more than Sh211 billion and cannot collect the same if the orders are sustained.

While urging Justice Thande to extend her orders suspending the Financial Act 2023, Otiende, Omtatah, Agoro, Matindi and Otieno argued that without knowing how the government is to spend the money it demands, then it would be illegal to allow it to collect taxes from Kenyans.

 The five petitioners stated that a total of 22 clauses, out of the 84 clauses contained in the contested Act were introduced on the floor of the House without public participation.

They argued that the government will not suffer any harm as the 2022 Finance law is still in effect.

Lawyer Otiende stated that the Finance Act has only the start date, meaning it does not expire until it is replaced with a new law adding that the government still has Sh3.4 trillion in its pockets.

The Rairieda MP said Finance Act 2023 promotes involuntary servitude while pointing out it is impossible for a Kenyan who has either paid for an item or fare to go reclaim the amount they paid.

“The entire Act suffers unconstitutional infirmities. A total of 22 clauses were introduced on the floor of Parliament without public participation. Public participation is a core of the Constitution. Extending the orders and giving directions to determine the case within 30 days will be the way to go,” said Otiende.

Matindi called on the judge to consider the implications of the new law on Kenyans. The UK-based Kenyan stated that matatus have already hiked fares. He also urged the judge to extend her orders.

“Kenyans will be taxed without a lawful basis. I invite the court to take judicial notice that matatus intend to increase the fare by 30 per cent. If the court agrees with us, Kenyans will not be compensated,” said Matindi.

Citing Energy Petroleum Regulatory Authority (EPRA) for adjusting fuel prices upward, Omtatah expressed his disappointment stating that even with the court orders, some government agencies had defied and implemented the Act. 

In reply, Prof. Githu argued that the orders should not have been granted as the government had already raised the ground that the court had no powers to entertain the case.

“The orders ought not to have been granted if the petitioners had not misled the court and abused the court process. The jurisdiction was already a matter contested,” said Githu.

Others that have filed separate cases include Azimio la Umoja One Kenya Coalition Party, Law Society of Kenya, Kenya Human Rights Commission, Katiba Institute, Transparency International, International Commission of Jurists (Kenya Section), Tribeless Youths, Siasa Place and Trade Unions Congress Kenya.