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Why was the Finance Act 2023 declared unconstitutional?

Introduction

The Finance Act, 2023, was a piece of legislation enacted by the Kenyan Parliament to address various financial matters. However, it faced legal challenges, culminating in a landmark ruling by the High Court declaring certain provisions unconstitutional. This response will delve into the reasons behind this declaration, drawing upon relevant legal provisions and judicial pronouncements.

Table of Contents

1. Sources

2. The Finance Act, 2023

3. Constitutional Challenges

4. The High Court Ruling

5. Conclusion

Sources

• The Constitution of Kenya, 2010

• The Finance Act, 2023

• High Court Ruling on the Finance Act, 2023

The Finance Act, 2023

The Finance Act, 2023, was enacted by Parliament to address various financial matters, including taxation, revenue generation, and expenditure. It introduced several new measures, such as:

• Increased taxes: The Act increased taxes on various goods and services, including fuel, alcohol, and tobacco.

• New taxes: The Act introduced new taxes, such as a digital service tax and a housing levy.

• Changes to existing tax laws: The Act made changes to existing tax laws, such as the Value Added Tax (VAT) Act.

Constitutional Challenges

The Finance Act, 2023, faced several constitutional challenges, primarily based on the following grounds:

• Violation of the principle of separation of powers: The Act was argued to have encroached upon the powers of the Judiciary by attempting to regulate the judicial process.

• Violation of the right to fair administrative action: The Act was argued to have violated the right to fair administrative action by introducing new taxes and levies without adequate consultation with stakeholders.

• Violation of the right to property: The Act was argued to have violated the right to property by imposing excessive taxes and levies on individuals and businesses.

The High Court Ruling

The High Court, in its ruling, declared certain provisions of the Finance Act, 2023, unconstitutional. The Court found that:

• The Act violated the principle of separation of powers: The Court held that the Act's provisions relating to the regulation of the judicial process were an encroachment upon the powers of the Judiciary.

• The Act violated the right to fair administrative action: The Court found that the Act's introduction of new taxes and levies without adequate consultation with stakeholders violated the right to fair administrative action.

• The Act violated the right to property: The Court held that the Act's imposition of excessive taxes and levies on individuals and businesses violated the right to property.

The Court, therefore, struck down the unconstitutional provisions of the Act, effectively nullifying their legal effect.

Conclusion

The declaration of certain provisions of the Finance Act, 2023, as unconstitutional highlights the importance of upholding the Constitution and its principles. The High Court's ruling serves as a reminder that legislation must be consistent with the Constitution and respect the fundamental rights of citizens. The ruling also underscores the importance of public participation and consultation in the legislative process.