Supreme Court to rule on order lifting Finance Act

All eyes will be on the Supreme Court today as judges rule on whether they will reinstate temporary orders blocking the government from implementing the Finance Act, 2023 pending the hearing of a lawsuit challenging its legality.

The judges, led by Chief Justice Martha Koome, are expected to decide an appeal by Busia Senator Okiya Omtatah and three other activists who are seeking to set aside the orders by the Court of Appeal that reinstated the provisions of the Finance Act, 2023. The appellate court had disagreed with the High Court, which had suspended the implementation of the tax measures as proposed in the Finance Act, which President William Ruto signed into law in June.

In a communique to all parties in the case, the Registrar of the Supreme Court, Letizia Wachira, said that the judges will deliver their decision on the application by Omtatah today at 10am.

“Take notice that the ruling on this matter (between Omtatah and three others versus the Cabinet Secretary Treasury and 10 others) will be determined via email on Friday September 8, 2023 at 10am before the Supreme Court of Kenya,” Wachira said.

The Supreme Court decision today comes after all parties including the Attorney General Justin Muturi and Treasury CS Njuguna Ndung’u, National Assembly and Senate and KRA filed their written submissions on whether the court should reinstate the High Court orders barring National Treasury’s plan to raise more taxes to implement the Sh3.6 trillion budget pending the determination of the Omtatah’s suit.

The Senator has pleaded with the Supreme Court to suspend orders of the Court of Appeal that set the stage for the implementation of the Finance Act.

The appellate court lifted the suspension on July 28 which had been stayed by the High Court on June 30.
While lifting the orders, appellete court Justices Mohammed Warsame, Kathurima M’Inoti and Hellen Omondi ruled that the Finance Act has a life span of 90 days beyond which the next budgetary cycle is set in motion.

“We have no doubt in our mind that the Finance Act and the Appropriation Act are interdependent. While the former provides for generation of the funds, the latter provides for the expenditure. There can be no expenditure where the mode of generation of the funds has not been provided for,” the judges said.

Aggrieved by the move Omtatah moved to the Apex Court contending that the Court of Appeal lacked jurisdiction to interfere with the orders that the High Court had issued halting the implementation of the Act.

“Unless the Court of Appeal’s Ruling and Orders made on July 28, 2023 are suspended, the hearing and determination of the amended petition by a three-judge bench in the High Court will be a mere academic exercise,” says Omtatah.

While seeking the suspension of the act by the Supreme Court, Omtatah says it will be impossible to undo the damage caused by continuous implementation of the Finance Act once they successfully demonstrate to the Court how Kenyans were subjected to an unconstitutional tax regime.

According to the Senator, Kenyan taxpayers are being subjected to losses that cannot be remedied should the Petition pending in the High Court succeed.

“Kenyan taxpayers will be subjected to irreparable harm should the Petition pending in the High Court succeed and it is demonstrated that they were subjected to an unconstitutional tax regime,” says Omtatah.

Treasury CS Ndung’u argued before the court that the government lost half a billion shillings daily following the suspension of the Act.

Ndung’u has urged the Apex court not to uphold the Court of Appeal decision that allowed the government to further implement new taxes law.

Through lawyer Githu Muigai, Ndung’u’s together with the Attorney General Justin Muturi to the Apex court that the reinstatement of the orders by the court will create a budgetary crisis to the country.

“When the orders suspending the implementation of the new law had been in force the same crippled the government operations in terms of revenue collections and the state was not able to withdraw funds from the consolidated funds. Kindly do not reinstate the same,” Githu told the Apex court judges in his written submissions.

The Apex court ruling comes days before the hearing of the main suit filed at the High Court seeking to declare the Finance Act 2023 null and void and unconstitutional on Wednesday next week (September 13, 2023).

Justices David Majanja, Christine Meoli and Lawrence Mugambi of the High Court set the hearing date of the petition on August 7, 2023 following a pre-trial conference.