Lawyer asks court to declare Finance Act 2022 against law

A city lawyer has moved to court to challenge the Finance Act 2022, which was signed into law by President Uhuru Kenyatta on June 21.

Mwaura Kabata claims that at the time of the enactment of the said Finance Act, the National Assembly was not properly constituted for purposes of executing its constitutional mandate.

He argues that on September 21, 2020, then Chief Justice David Maraga issued an Advisory to the President for Parliament to be dissolved for failing to enact the two-third gender rule legislation in accordance with the constitutional requirements.

“His advisory is a clear testimony of Parliament’s lackadaisical attitude and conduct in the question. As such, parliament was not properly constituted to consider, deliberate and pass the Finance Act as is,” he argues in court documents.

Kabata further claims that the said Act was enacted against the backdrop and complete violation of status quo orders touching on the question of the increase of the price of petroleum products.

The lawyer notes that on the September 25, 2020 the Commissioner General of the Kenya Revenue Authority(KRA) had issued rates of excise duty on various commodities factoring in an adjustment for inflation. The adjustment was brought to effect via Kenya Gazette Supplement No. 173 of  October 1, 2020 under Legal Notice No. 194.

On the said backdrop and upon various representations by parties the court issued status quo orders stalling the application of the legal notice pending the determination of the matter.

He says events leading up to the enactment of the Finance Act completely fly in the face of the law as the matter is actively before court challenging the hiking of excise duty from the rates previously in Legal Notice No. 194 to new rates in Legal Notice No. 217.

“Yet, incredibly and despite awareness by all parties herein of the pending suit, the Finance Act was passed into law and at Section 35 therein it further escalates rates from where an impugned Legal,” he claims in court documents.

The lawyer further argues  that the retail cost of the impugned products in the Act are now destined to exponentially go high leading to diminished returns for business owners in the manufacturing sector, increased costs of the impugned products in the market leading to an influx in counterfeit produce in the market.

“This will not only erode the market and business environment but also risk health and life while eroding consumer rights amidst tough economic time’s world over,” he says.

Suffering financially

It is his case that consumers and manufacturers as well as business owners are set to suffer financially by the heightened tax pressure, which stems from an event of illegality in enacting the law.

He further contends that Section 5 of the Statutory Instruments Act No.23 of 2013 mandates that all regulation making authorities must conduct consultations with persons who are likely to be affected by the proposed changes in the instrument and in particular where the proposed statutory instrument is likely to have a direct or substantial indirect effect on business or restrict competition which parliament never adhered to.

“Parliament in entertaining the Finance Bill and thereafter the Finance Act was and remains to be in breach of the legal doctrine of Separation of Powers being that the Act contains and makes dispositions on questions including administration of excise duty which questions are subject matter of active litigation before this Honourable Court,” he argues.

He wants the court to quash the said Act for failing to adhere to foundational tenets of law making and for being made in breach of existing court orders. He further wants Commissioner General Kenya Revenue Authority be prohibited from implementing the Finance Act.