By Hilda Kavai.

Kenya’s taxation plans have hit a snag as the High Court of Kenya indefinitely extended a prior suspension on the Finance Act 2023 that was due to go into effect on July 1.

This decision occurred as a result of a case filed by Busia Senator Okiya Omtatah, who challenged the constitutionality of numerous portions of the bill, claiming that they violate the Constitution in taxation concerns.

During the court hearing, Senator Omtatah expressed concern about 30 sections of the bill that allegedly violate constitutional provisions on taxation, urging the court to halt implementation of the Finance Act until the pending case is heard and determined, claiming that “it will subject Kenyans to slavery and servitude.”

In May this year, the Kenyan government proposed a number of amendments to the Finance Act 2023 that was not well received by most Kenyans. Among the amendments was a proposal to tax content creators, influencers, and crypto currency dealers.

President William Ruto assented to the Finance Bill and Appropriations Bill on Monday, June 26, 2023 at State House, Nairobi after a few modifications.

He also approved the Supplementary Appropriations (No. 2) Bill, 2023 warranting the additional spending by the National Government of Sh22.9 Billion from the Consolidated Fund.

This results in the reduction of overall expenditure by Sh25.5 Billion compared to the revised total National Government expenditure approved in the Supplementary Appropriations (No. 1), Act 2023.

The reduction comprises an increase in recurrent amounting to Sh9.5 Billion and rationalization of development spending by Sh 35 Billion.

The scaling down in spending is in line with the Government’s fiscal consolidation efforts in the light of debt servicing payments.

The Appropriations Bill authorizes the withdrawal of money from the Consolidated Fund for the expenditure of the National Government.

This is the first Appropriations Bill under the Kenya Kwanza Government and, therefore, seeks to align its Manifesto and promises through assignment of actual resources to meet various services and projects.

Speaking on behalf of the state, former Attorney General Githu Muigai cautioned that suspending the Act would jeopardize government operations. However, Justice Mugure Thande went ahead and extended the suspension.

In her ruling, the judge stated that, comparing the inconveniences that President William Ruto’s administration would face against the pain that Kenyans would have to bear if the law was determined to be unconstitutional, the latter was the lesser of two evils.

As she concluded her ruling, Justice Mugure directed that she would hand over the file to Lady Justice Martha Koome who would go on to appoint a three-judge bench so that they can hear the case.

It has been 13 days since the Act was suspended.

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