The Finance Act 2023 has been declared unconstitutional by the Court of Appeal, citing flaws in the process leading to its enactment.
Justices Kathurima M’inoti, Agnes Murgor, and John Mativo highlighted that sections introduced to amend several acts were unconstitutional due to a lack of fresh public participation.
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This Act resulted in 11 constitutional petitions, heard by a three-judge bench led by the late Justice David Majanja. In their ruling, the bench declared some sections of the Act, including the housing levy, as unconstitutional, noting that it violated principles of taxation and was discriminatory.
However, the Court upheld the 16% VAT on insurance premiums, the digital asset tax, and the tax on betting as constitutional. Despite the government’s appeal, the Court of Appeal noted that the question of the housing levy’s unconstitutionality had become insignificant with the enactment of the Affordable Housing Act, 2024.
The judges stressed that Parliament must provide reasons for adopting or rejecting any proposals during the public participation process.
Ultimately, they concluded that the entire Finance Act 2023 was unconstitutional due to violations of constitutional requirements during its approval.
