New tax scheme illegal, rules High Court

What you need to know:

  • In the ruling on Wednesday, Justice Wilfrida Okwany noted a danger in implementing a bill that has not been subjected to public participation.
  • While pointing a finger at legislators, the judge said they were alive to the fact that there could be instances where enactment of the Appropriation Act could be delayed.

The High Court has ruled that the Finance Bill, 2018 or any part of it cannot become law before it is taken through the legislative process.

In the ruling on Wednesday, Justice Wilfrida Okwany noted a danger in implementing a bill that has not been subjected to public participation.

IMPLICATIONS

Judge Okwany declared that the Provisional Collection of Taxes and Duties Act is "unconstitutional and therefore invalid, null and void" and that the Provisional Collection of Taxes and Duties, Order 2018, is also unconstitutional.

While pointing a finger at legislators, the judge said they were alive to the fact that there could be instances where enactment of the Appropriation Act could be delayed.

She said they made a provision to take care of such an eventuality by empowering the National Assembly to authorise the withdrawal of money from the Consolidated Fund to facilitate government business until the law is assented to.

The High Court’s decision implies that new taxes which had been imposed on kerosene, bottled water, mobile money transfer, imported vehicles and Robin hood tax were unlawfully effected.

The judge issued the judgment in a case in which activist Okiya Omtatah sued National Treasury Cabinet Secretary Henry Rotich, the Commissioner General of the Kenya Revenue Authority, the National Assembly and the Attorney General.

Mr Omtatah challenged the imposition of the new tax as proposed in the Finance Bill while arguing that Kenyans need to be shielded from exposure to taxes which have not been approved by Parliament and assented to by the president.

“I have considered the nature of the impugned legislation and I find that its effect on relevant stakeholders and the public cannot be downplayed,” said Justice Okwany.

She added: "The legislation in question is intended to impose a tax burden upon certain products and services, which implies that it will create a financial cost element or burden to be borne by the public alongside other stakeholders.”