Unconstitutionality of the Finance Act 2023.

RWK Africa

The Finance Act 2023 in Kenya has been declared unconstitutional by the Court of Appeal. This ruling, issued on July 31, 2024, found that the Act was fundamentally flawed due to significant violations of constitutional provisions, particularly concerning public participation in the legislative process.

The court determined that the Act contravened Articles 220(1)(a) and 221 of the Kenyan Constitution and sections of the Public Finance Management Act (PFMA), which govern the budget-making process. As a result, the Act is considered void ab initio, meaning it was invalid from the outset.

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Reasons:

The Court of Appeal's decision highlighted several key reasons for the unconstitutionality of the Finance Act 2023:

• Lack of Public Participation: The Act was enacted without adequate public participation, failing to meet the constitutional requirement for engaging the public in legislative processes.
• Violation of Budget-Making Process: The enactment process violated Articles 220(1)(a) and 221 of the Constitution and sections of the PFMA, which outline the necessary steps for the budget-making process.
• Discriminatory Housing Levy: Section 84 introduced a housing levy that was discriminatory, failing to adequately distinguish between the formal and informal sectors.
• Procedural Irregularities: The legislative process bypassed crucial stages, including the lack of concurrence from both houses of Parliament, further contributing to its invalidation.
• Negative Economic Impact: The discriminatory housing levy exacerbated financial burdens on citizens in formal employment, creating broader negative economic impacts.

These reasons formed the basis of multiple legal challenges, including those brought by Senator Okiya Omtatah, who argued that the Act had been passed without proper adherence to constitutional principles. The court's ruling means that the tax rates and other provisions introduced by the Finance Act 2023 are now null and void, reverting the country to the provisions of the Finance Act 2022.

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In summary, the Finance Act 2023 has been nullified in Kenya, marking a significant setback for President William Ruto's administration and its fiscal policies. The Court of Appeal's ruling underscores the importance of adhering to constitutional mandates and ensuring adequate public participation in legislative processes. This decision not only invalidates the Finance Act 2023 but also serves as a reminder of the critical role of constitutional compliance in the enactment of laws.

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