The Court of Appeal in Nairobi has declared the Finance Act, 2023 unconstitutional.
The ruling, delivered on July 31, 2024, by Justices M’Inoti, Murgor, and Mativo, invalidates the entire Act due to procedural and constitutional breaches in its enactment.
The court’s detailed judgment, spanning 120 pages, revealed that the Finance Act, 2023, was fundamentally flawed, violating several constitutional provisions.
Specifically, the court found that the Act contravened Articles 220(1)(a) and 221 of the Kenyan Constitution, as well as sections 37, 39A, and 40 of the Public Finance Management Act (PFMA), which govern the budget-making process.
Central to the court’s decision was the failure to adhere to adequate public participation requirements.
The judges emphasized that Parliament is mandated to provide reasons for adopting or rejecting public proposals during the legislative process.
The ruling stated, “a declaration is hereby issued that the failure to comply with this constitutional dictate renders the entire Finance Act, 2023, unconstitutional.”
The court also upheld the High Court’s earlier finding that specific sections of the Finance Act, 2023—particularly those amending the Kenya Roads Act, 1999—were unconstitutional, null, and void.
The decision reaffirmed that both houses of Parliament must concur in such legislative actions, which was not observed in this case.
The appeal was brought by multiple appellants, including activist Okiya Omtatah Okoiti and various civil society organizations.
They argued that the Act had been passed without proper adherence to constitutional principles, particularly concerning public participation and legislative procedure.
The ruling casts uncertainty over the tax amendments introduced by the Finance Act, 2023, including changes to tax rates and new levies.
With the Act now declared null and void, there is a significant gap in the legal framework governing taxation and public finance.
