The Supreme Court of Kenya has ruled to dismiss a petition filed by Busia Senator Okiya Omtatah. The petition aimed to stop the implementation of the Finance Act, a critical piece of legislation that has been at the center of debate and legal challenges due to the fact that citizens will bear the huge burden.
The Finance Act, 2023, has been a subject of intense scrutiny and discussion since its inception. It encompasses a wide range of important policies, including taxation, revenue generation, and government spending. However, its implementation faced a legal hurdle when the High Court initially issued an order to suspend its enforcement, but bits of it has since been implemented.
Senator Omtatah, along with three other petitioners, sought to challenge the lifting of the High Court’s suspension order, effectively opening the door for the Finance Act’s implementation. Their argument based on concerns about the Act’s potential impact on various aspects of the economy, as well as its compliance with legal and constitutional standards.
In July, the Court of Appeal took a significant step by removing an injunction that had previously halted the enforcement of a comprehensive law. This law included several notable provisions, such as the doubling of the Value Added Tax (VAT) on petroleum products, raising it to 16 percent. Additionally, it introduced a 1.5 percent housing levy.
The law further had adjustments to income tax rates, particularly targeting high-income earners. Those individuals with a gross salary exceeding Sh500,000 saw a tax rate increase to 32.5 percent, while those earning Sh800,000 and above experienced a tax rate adjustment to 35 percent, deviating from the standard rate of 30 percent.
Significantly, the law eliminated VAT on Liquefied Petroleum Gas (LPG), signaling a shift in tax policy with regards to this energy source.
Okiya Omtatah, joined by six other individuals, then embarked on a legal challenge against these new tax measures. Their argument centers on the contention that the failure to present this legislation to the Senate constitutes a violation of section 40(3) of the Public Finance Management Act, 2012.
The Supreme Court’s decision to dismiss Okiya Omtatah’s petition then means, it will go on and implementation will be effected without doubt.
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