Milimani Court has suspended the implementation of the Finance Act 2023, causing a delay in the government's plans to introduce new tax rules.
This decision comes after Judge Mugure Thande extended interim orders that were previously granted on June 30, 2023. The judge has suspended the implementation of the new tax law until she delivers a substantive ruling on July 10, 2023.
During the court proceedings, which lasted for seven hours, Judge Thande also stayed the implementation of the Finance Act 2023, which had been approved by President William Ruto on June 26, 2023.
The judge listened to lengthy submissions from the parties involved in the legal dispute and made the decision to extend the interim orders.
Although the court did not summon the Managing Director of the Energy and Petroleum Regulatory Authority (EPRA), Daniel Kiptoo Bargoria, in relation to the illegal hiking of fuel prices, Judge Thande directed the Attorney General, Cabinet Secretary Treasury Prof Njuguna Ndung'u, and the Speakers of the two houses, Moses Wetangula and Amoson Kingi, to respond to the contempt case filed by Busia Senator Okiya Omtatah and six others.
"The application for contempt of court was not coming for directions today (July 5) and l hereby direct the responses be filed by close of business on July 7 and directions will be given thereafter on a date to be advised," Thande ruled.
The responses are to be filed by July 7, and further directions will be given thereafter.
In the court session, Omtatah, along with lawyers Otiende Amollo and Daniel Maanzo, urged the court to suspend the implementation of the Finance Act 2023 until the pending case is heard and determined.
Omtatah argued that the Act would subject Kenyans to slavery and servitude.
He also claimed that the Finance Bill, which was approved by Members of Parliament without the concurrence of the senators, is illegal.
He further criticized the Act, stating that it is unconstitutional as it only focuses on expenditure without specifying how revenue will be raised to cater to the appropriation.
Supporting the extension of the interim orders, Omtatah expressed concerns that the implementation of the new tax law would cause great suffering for taxpayers.
He specifically criticized Parliament for raising fuel prices by 16 per cent without providing information on the intended revenue or purpose for collection, stating, "You cannot tax Kenyans without telling them how much money you intend to raise."
Lawyer Otiende Amollo argued that the entire Finance Act 2023 is procedurally unconstitutional.
He criticized Speaker of the National Assembly Moses Wetang'ula for introducing 22 new clauses on the floor of the House without public participation.
"To bring in a quarter of the entire of the 84 clauses through an addendum is essentially to bring in a new bill which members of the public did not participate in," Otiende said.
Otiende stated that the purpose of the Finance Act is to amend existing laws for various taxes and collection of duties, as mandated by Article 203 of the Constitution.
He argued that suspending the implementation of the Act would not result in any loss, as tax collection is continuing under the 2022 Finance Act.
"There will be no loss suffered in stopping the implementation of the impugned Finance Act 2023 since tax collection is continuing under the 2022 Finance Act," Otiende argued.
The Attorney General, Justin Muturi, opposed the request to suspend the Finance Act, warning that such a move would lead to a budgetary crisis in the country.
Lawyer Issa Mansur, representing the Senate, supported Muturi's stance and highlighted that the law allows the two speakers to address issues without requiring concurrence.
In response to the developments, Thande allowed four other interested parties to join the suit and ordered them to file their arguments by July 7, 2023. Further directions on the matter will be provided on July 10, 2023.
As a result of the Milimani Court's decision to suspend the implementation of the Finance Act 2023, the government's plans to introduce new tax rules will face a prolonged delay.
The substantive ruling expected on July 10 will determine the fate of the tax law and its impact on the country's finances.