President Ruto suffers a fresh setback as a Kenyan court strikes down the 2023 finance bill

President William Ruto’s administration suffered a setback when the Court of Appeal in Kenya ruled on Wednesday that the government’s 2023 finance law was unconstitutional. This came after the government dropped this year’s finance bill due to violent demonstrations.

The primary means by which the government outlines its plans to increase revenue, such as tax increases and the imposition of new levies, are through the finance bills, which are brought before parliament at the beginning of each fiscal year.

The 2023 version was used by Ruto’s government to impose a house tax, increase the value added tax on gasoline, hike the highest personal income tax rate, and other measures. This was followed by a wave of violent street protests organized by the political opposition. The 2023 version was then challenged in court.

A three-judge panel of the Court of Appeal said, “A further declaration is hereby issued that the failure to comply with this constitutional dictate renders the entire Finance Act, 2023 unconstitutional.”

The court’s decision pertained to an appeal of a previous ruling rendered by the High Court at the end of last year, which mainly preserved the finance bill while eliminating the housing fee.

Following that decision, the government pushed through a new law that is currently being contested in court to enable it to continue collecting the housing tax.

After Ruto withdrew this year’s bill, the government relied on the 2023 finance law to continue collecting taxes. The government did not immediately comment on the verdict.

The highest court, the Supreme Court, is where the government can file an appeal of the Court of Appeal decision.

Reuters was unable to obtain a response from Musalia Mudavadi’s office, the chief minister. Chris Kiptoo, the finance ministry’s top officer, did not reply to messages seeking comment.

After dismissing all but one of the ministries in reaction to the violent protests organized by young people that began last month, Ruto has proposed a new finance minister.

According to Ruto, the government needs to raise taxes in order to pay off its substantial public debt, which now surpasses the guidelines suggested by the World Bank and the International Monetary support. This will allow the government to support development programs.

The administration anticipates that the IMF board will review a revised economic plan it filed at the end of August.