AFRICA LAW & JUSTICE

KENYA’S SUPREME COURT REINSTATES 2023 FINANCE LAW IN VICTORY FOR RUTO

KENYA’S SUPREME COURT REINSTATES 2023 FINANCE LAW IN VICTORY FOR RUTO
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Faith Nyasuguta 

Kenya’s Supreme Court has overturned an appeals court decision that had nullified the 2023 finance law, marking a significant victory for President William Ruto’s administration. The government had been relying on the 2023 law to continue tax collection after withdrawing this year’s finance bill due to widespread protests. The Supreme Court stated, “We hereby set aside the Court of Appeal’s finding declaring the entire Finance Act 2023 unconstitutional.”

The 2023 finance law, which included increased fuel taxes, a housing levy, and higher top income tax rates, had triggered opposition-led protests and unrest last year. 

Ruto’s government, which took office in September 2022, sought to impose a new round of tax hikes this year, angering many citizens and culminating in deadly protests in June and July in which more than 60 people were killed.

In response to the public outcry, President Ruto withdrew this year’s finance bill, delaying an International Monetary Fund (IMF) disbursement. Despite the controversy, Ruto maintains that the tax hikes are crucial for funding development and addressing Kenya’s mounting debt.

William Ruto /Reuters/

The Supreme Court’s decision to reinstate the 2023 finance law comes after a series of legal battles and public demonstrations. The law had been challenged in court by various petitioners, including opposition leaders and civil society groups, who argued that it was unconstitutional and lacked adequate public participation. However, the Supreme Court found that the legislative process, including public participation and concurrence, adhered to constitutional requirements.

The reinstatement of the 2023 finance law is expected to have significant implications for Kenya’s economy. The law’s provisions, such as increased fuel taxes and the housing levy, are designed to generate additional revenue for the government. These funds are intended to support various development projects and address the country’s debt burden, which has been a growing concern for the Ruto administration.

The increased fuel taxes, in particular, have been a point of contention. Critics argue that the higher taxes will lead to increased transportation costs, which could have a ripple effect on the prices of goods and services. This, in turn, could exacerbate the already high cost of living for many Kenyans. However, supporters of the law argue that the additional revenue is necessary to fund critical infrastructure projects and improve public services.

The housing levy, another controversial provision of the 2023 finance law, aims to address the housing shortage in Kenya. The levy requires employees to contribute a percentage of their gross salary towards a housing fund, which will be used to finance affordable housing projects. While the levy has been criticized for placing an additional financial burden on workers, proponents argue that it is a necessary step to address the country’s housing crisis.

The Supreme Court’s decision to uphold the 2023 finance law also has political implications. The ruling is seen as a victory for President Ruto, who has faced significant opposition and criticism over his economic policies. By reinstating the law, the Supreme Court has effectively endorsed Ruto’s approach to addressing Kenya’s economic challenges.

/Courtesy/

The decision is also likely to impact Kenya’s relationship with international financial institutions. The IMF had delayed a disbursement of funds to Kenya pending the resolution of the legal challenges to the finance law. With the Supreme Court’s ruling, it is expected that the IMF will proceed with the disbursement, providing much-needed financial support to the Kenyan government.

As Kenya moves forward with the implementation of the 2023 finance law, the government will need to address the concerns of those who have opposed the law. Ensuring transparency and accountability in the use of the additional revenue will be crucial to gaining public trust and support. Additionally, the government will need to take steps to mitigate the impact of the tax hikes on vulnerable populations.

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Faith Nyasuguta

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