Supreme Court to decide fate of Finance Bill 2023 and housing levy

On Tuesday, all eyes will be on the Supreme Court, which will rule on the government’s appeal regarding the legality of the entire Finance Act 2023.

Seven high court judges, led by Chief Justice Martha Kume, are also expected to rule on the fate of the Housing Levy Act, just days after the High Court in another case found it to be duly enacted.

The decision follows an appeal filed by the government, including the Attorney General (AG), the Minister of Finance, the National Assembly and the Kenya Revenue Authority (KRA), against the Court of Appeal’s decision declaring the Finance Act 2023 unconstitutional.

The Court of Appeal’s decision was based on several procedural and constitutional considerations.

The Court found that certain sections of the Act introduced after the public participation phase did not meet the constitutional requirements for public participation.

Judge Appellants Kathurima M’inoti, Agnes Murgor and John Mativo highlighted that the significant amendments made following the consultation violated the principles of transparency and inclusiveness that are critical to Kenya’s legislative process.

In August, the government, unhappy with the appellate court’s decision, urged the Supreme Court to overturn the decision of the Finance Act 2023, citing the economic crisis.

Githu Muigai, representing the AG and CS of the Ministry of Finance, told the judges that the law was vital to the economic stability of the country and that its repeal could lead to a financial crisis. He argued that the affordable housing levy remained an important priority for the government.

“The question of how to pass an effective and constitutionally compliant tax law is not just an academic exercise, but a practical necessity for managing the country’s revenue,” he said.

However, Busia Senator Okiya Omtata, activist Eliud Matindi and several civil society organizations rallied to the Supreme Court to support the Court of Appeal’s decision declaring the Finance Act 2023 unconstitutional.

Other petitioners, including the Law Society of Kenya (LSK), the Azimio la Umoja Coalition and the Katiba Institute, argue that the Finance Act was flawed and procedurally flawed, arguing that appeals against the Court of Appeal’s decision are without merit.

In its appeal to the Supreme Court, LSK supported the decision of the Court of Appeal, arguing that the Finance Act 2023 was enacted in violation of constitutional norms.

Through Senior Counsel Charles Kanjama, the society noted that the passage of the law bypassed critical procedural requirements, including adequate public participation and due legislative review.

Omtata argued that the government had failed to adequately engage with those directly affected by the provisions of the Act, including the marginalized and illiterate population.

“The process did not meet constitutional requirements for meaningful public participation. The views of those most affected by the amendments were neither sought nor taken into account, which is a fundamental flaw in democratic governance,” he said.

The senator insisted that the amendments to the law were passed without sufficient input from those who would bear the financial consequences.

This oversight, he argued, is contrary to the principles of transparency and inclusiveness enshrined in the Constitution, thereby nullifying the law-making process.

Addressing the controversial issue, Kanjama focused on the housing finance levy.

He argued that the Affordable Housing Act has repealed Section 84 of the Finance Act 2023, which was previously the subject of controversy.

“With the repeal of the relevant section of the Affordable Housing Act, the specific issue regarding housing tax has become moot,” Kanjama explained.

It concluded that the procedural shortcomings of the Finance Act undermined public confidence in the legislative process and set a dangerous precedent if left unaddressed.