Kenya’s Finance Act 2023 Declared Unconstitutional: Key Rulings and Implications
In a landmark decision, Kenya’s Court of Appeal has declared the Finance Act 2023 unconstitutional, emphasizing the need for strict adherence to constitutional principles in the legislative process. This ruling marks a significant development in Kenya’s legal landscape, addressing the legitimacy of the Finance Act, which had been marred by controversy and legal disputes.
Background
Enacted in June 2023, the Finance Act 2023 was swiftly passed following its introduction as the Finance Bill on April 28, 2023. The Act proposed amendments to twelve existing laws, including the Income Tax Act, Value Added Tax Act, and Employment Act. One of the most debated aspects of the Act was the Affordable Housing Levy, which faced considerable scrutiny.
Legal Controversies
The Finance Act 2023 faced eleven constitutional petitions challenging its validity. These petitions, consolidated in the High Court, questioned both the process of its enactment and specific provisions within the Act. The High Court ruled that several sections of the Act were unconstitutional, prompting an appeal to the Court of Appeal.
Court of Appeal Ruling
The Court of Appeal’s judgment reaffirmed the Finance Act 2023’s classification as a money Bill but found that it contained unconstitutional elements. Key issues addressed by the Court included:
- Classification and Content: While the Court upheld the Act’s status as a money Bill, it found unconstitutional provisions related to amendments of laws such as the Kenya Roads Board Act and the Unclaimed Financial Assets Act, which were extraneous to the Bill’s purpose.
- Public Participation: The Court acknowledged the National Assembly’s efforts in public participation but called for greater transparency. It recommended that Parliament should provide clear reasons for accepting or rejecting public proposals to enhance accountability.
- Affordable Housing Levy: The Court criticized the Affordable Housing Levy for lacking a comprehensive legal framework and being discriminatory. It deemed the levy unconstitutional due to its arbitrary nature.
- Legislative Process: The Court supported the appellants’ view that no joint concurrence between the National Assembly and the Senate was required for money Bills.
Impact and Next Steps
The ruling by the Court of Appeal highlights the critical need for adherence to constitutional mandates in legislative processes. While the Finance Act 2023 remains largely intact, the judgment necessitates revisions to address the unconstitutional provisions. Specifically, the Court’s decision has significant implications for the Affordable Housing Levy and underscores the importance of thorough public participation.
The ruling sets a precedent for future legislation, balancing efficient governance with constitutional integrity. It also reinforces the need for legislative bodies to uphold transparency and inclusivity in their processes. The Court’s findings indicate a need for legislative bodies to address public feedback more effectively and ensure compliance with constitutional requirements.
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