Court of Appeal declares Finance Act 2023 unconstitutional

Nairobi, 

Wednesday, 31 July, 2024 

McCreadie Andias 

The Court of Appeal has declared the Finance Act, 2023 unconstitutional.

The ruling stated, "a declaration is hereby issued that the failure to comply with this constitutional dictate renders the entire Finance Act, 2023, unconstitutional." 

The decision delivered on July 31, 2024, by a panel of three judges, Justices M'Inoti, Murgor, and Mativo declared that the process leading to the enactment of the Finance Act 2023 was fundamentally flawed and in violation of the Constitution. 

The Act was upheld in 2023 raising VAT on fuel, Housing tax, higher P.A.Y.E rates and others.

The court found that the Finance Act, 2023, contravened Articles 220(1)(a) and 221 of the Kenyan Constitution, as well as sections 37, 39A, and 40 of the Public Finance Management Act (PFMA), which outline the budget-making process.

Moreover, the court upheld the High Court's finding that specific sections of the Finance Act, 2023—particularly those amending the Kenya Roads Act, 1999—were unconstitutional, null, and void.

The case was brought to court by several Appealants including Busia Senator Okiya Omtatah who argued that the Act did not follow legislative and constitutional provisions especially on public participation. 

The judges ruled that the failure to comply with these constitutional and statutory requirements rendered the entire Act unconstitutional and void from the outset.

The taxes contained in the Finance Act 2023 are separate from another set of revenue-raising measures President William Ruto’s administration sought to impose this year in the Finance bill 2024 that led to deadly protests forcing the president to withdraw the bill in totality. 

The move will potentially block a key source of budget financing for the government.