It seems that President Ruto lost his struggle against the Kenyan Court of Appeals regarding the legality of the Financial Act of 2023. Last week, the High Court ruled that the Financial Act of 2023 was unconstitutional because it violated the Constitution’s provisions on taxation and the separation of powers. President Ruto vowed to impose new taxes if the law was found unconstitutional, but it now looks like a long shot. Indeed, the Financial Act of 2023 was passed by Parliament on June 26, 2023. However, it was challenged in court and the Court of Appeal ruled that it was unconstitutional on August 1, 2023. The government has said that it will appeal the ruling to the Supreme Court.
The Financial Act of 2023 has been met with widespread opposition, with protests breaking out in several cities. The opposition argues that the tax increases will disproportionately burden the poor and middle class. The government, however, says that tax increases are necessary to raise revenue and stabilize the economy.
Some of the tax laws within the Financial Act of 2023 included: (1) a doubling of the value-added tax (VAT) on fuel from 8% to 16%; (2) a new 1.5% housing levy on workers’ salaries; (3) increase taxes in luxury goods, alcohol, and cigarettes; (4) increased taxes on business.
The Court believes that the value-added tax on fuel from 8% to 16% was unconstitutional. Indeed, it found that this increase was excessive and that it would have a disproportionate impact on the poor and the middle class.
The Court also found unconstitutional the imposed new 1.5% housing levy on workers’ salaries. The Court argued that this levy was a form of taxation without representation, as it was imposed without the consent of the people.
Lastly, the Court found unconstitutional that the Act gave the National Treasury the power to exempt certain businesses from paying taxes. It argued that this power gave the Treasury too much power and that it violated the separation of powers.
Many people argued that the Financial Act is unfair and will have a negative impact on the economy. And they are right indeed because this law, if passed, would have led to serious economic troubles for the country.
First, it would disproportionately burden the poor and middle class. The Act includes a number of tax increases, such as a doubling of the value-added tax (VAT) on fuel and a new 1.5% housing levy on workers' salaries. These taxes are likely to have a significant impact on low-income households, who are already struggling to make ends meet.
Second, it would not do enough to address the underlying problems in the Kenyan economy. The Act is largely focused on raising revenue, but it does not do much to address the underlying problems in the economy, such as corruption and a lack of investment in infrastructure.
Third, the legislation was rushed through Parliament without proper scrutiny. The Act was passed in just two weeks, which gave MPs little time to properly consider its implications. This has led to concerns that the Act may not be in the best interests of the country.
The court's ruling is a significant victory for the opposition, who had challenged the Act's constitutionality. The court's ruling was unanimous, with all five judges agreeing that the Act was unconstitutional. The government would certainly try to amend the Act to address the court's concerns. However, the Court's ruling has cast a shadow over the Act's future. This is a major setback for President Ruto and his administration.