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Why was the Finance Act 2023 declared unconstitutional?

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Introduction

The Finance Act 2023 was declared unconstitutional by the Kenyan judiciary due to several legal and procedural issues. This decision was based on various provisions of the Constitution of Kenya, 2010, and other relevant statutes. The ruling highlighted the importance of adherence to constitutional principles, legislative procedures, and the protection of fundamental rights.

Constitutional Provisions and Legal Framework
- 1.1 Constitution of Kenya, 2010
- 1.2 Public Finance Management Act, 2012
- 1.3 Statutory Instruments Act, 2013
Grounds for Unconstitutionality
- 2.1 Violation of Public Participation
- 2.2 Breach of Legislative Procedures
- 2.3 Infringement of Fundamental Rights
- 2.4 Lack of Clarity and Precision
Judicial Interpretation and Precedents
- 3.1 Role of the Judiciary
- 3.2 Relevant Case Law
Conclusion

1. Constitutional Provisions and Legal Framework

1.1 Constitution of Kenya, 2010

The Constitution of Kenya, 2010, is the supreme law of the land. Several articles within the Constitution were pivotal in the declaration of the Finance Act 2023 as unconstitutional:

Article 10: National values and principles of governance, including public participation, transparency, and accountability.
Article 118: Public access and participation in the legislative process.
Article 201: Principles of public finance, emphasizing openness and accountability.
Article 210: Imposition of tax and other revenue-raising measures, requiring legislative authority.

1.2 Public Finance Management Act, 2012

The Public Finance Management Act, 2012, provides a framework for the management of public finances in Kenya. It emphasizes the need for transparency, accountability, and public participation in financial matters.

1.3 Statutory Instruments Act, 2013

The Statutory Instruments Act, 2013, outlines the procedures for the creation, scrutiny, and approval of statutory instruments, including regulations and orders. It mandates public participation and parliamentary scrutiny to ensure legality and constitutionality.

2. Grounds for Unconstitutionality

2.1 Violation of Public Participation

Article 10 and Article 118 of the Constitution mandate public participation in the legislative process. The Finance Act 2023 was challenged on the grounds that there was inadequate public participation. Public participation is a cornerstone of democratic governance and ensures that the views and concerns of citizens are considered in the legislative process.
The judiciary found that the process leading to the enactment of the Finance Act 2023 did not meet the threshold for meaningful public participation. This was a significant factor in declaring the Act unconstitutional.

2.2 Breach of Legislative Procedures

Article 210 of the Constitution requires that any tax or revenue-raising measure must be authorized by legislation. The process of enacting such legislation must adhere to the procedures outlined in the Constitution and relevant statutes.
The court found that the legislative process for the Finance Act 2023 was flawed. There were procedural irregularities, including the failure to adhere to the timelines and processes stipulated in the Constitution and the Public Finance Management Act, 2012.

2.3 Infringement of Fundamental Rights

The Finance Act 2023 was also challenged on the grounds that it infringed on fundamental rights protected by the Constitution. For instance, the imposition of certain taxes and levies was argued to disproportionately affect vulnerable groups, thereby violating the principles of equality and non-discrimination under Article 27 of the Constitution.
The judiciary found that some provisions of the Finance Act 2023 were indeed discriminatory and did not align with the constitutional principles of fairness and equity.

2.4 Lack of Clarity and Precision

Article 210 of the Constitution also requires that any tax or revenue-raising measure must be clear and precise. The Finance Act 2023 was criticized for its lack of clarity and precision in certain provisions, making it difficult for citizens to understand their obligations and for authorities to enforce the law.
The court held that the lack of clarity and precision in the Act rendered it unconstitutional as it violated the principles of legal certainty and predictability.

3. Judicial Interpretation and Precedents

3.1 Role of the Judiciary

The judiciary plays a crucial role in interpreting the Constitution and ensuring that all laws and actions by the government comply with constitutional principles. In this case, the judiciary exercised its mandate to review the constitutionality of the Finance Act 2023.
The court's decision underscored the importance of adherence to constitutional principles, legislative procedures, and the protection of fundamental rights.

3.2 Relevant Case Law

The decision to declare the Finance Act 2023 unconstitutional was informed by previous judicial precedents. For instance, in the case of "Robert N. Gakuru & Others v. Governor Kiambu County & 3 Others [2014] eKLR", the court emphasized the importance of public participation in the legislative process.
Similarly, in "Law Society of Kenya v. Attorney General & 2 Others [2016] eKLR", the court reiterated the need for clarity and precision in legislation, particularly in tax and revenue-raising measures.

Conclusion

The declaration of the Finance Act 2023 as unconstitutional by the Kenyan judiciary was based on several grounds, including the violation of public participation, breach of legislative procedures, infringement of fundamental rights, and lack of clarity and precision. This decision underscores the importance of adherence to constitutional principles and the rule of law in the legislative process. The judiciary's role in upholding the Constitution and protecting the rights of citizens is crucial in ensuring that all laws and actions by the government comply with constitutional standards.