Court extends Finance Act freeze to next week amid KRA's protests

The High Court in Nairobi has extended orders freezing implementation of the Finance Act, 2023 until Monday, July 10. 

Justice Mugure Thande said the court will decide on July 10 whether the orders will remain until the cases filed against the new law, are heard and determined.

This comes as the government clashed with parties opposed to the Act on extension of the orders. Those opposed to implementation of the new Act argued that it is impossible to tell how the Kenya Kwanza administration will spend the money collected from taxpayers as it did not present its revenue estimates to Parliament for approval.

At the same time, the petitioners led by Busia Senator Okiya Omtatah argued that MPs illegally sneaked in 22 clauses in the Finance Act 2023.

But the Attorney General and the Kenya Revenue Authority (KRA) argued that the government will lose more than Sh211 billion and cannot collect the same if the orders are sustained.

While urging Justice Thande to extend her orders, suspending the Financial Act, senior lawyer Otiende Amolo, Senator Omtatah, Peter Agoro, Eliud Matindi, Benson Otieno and Clement Agoro argued that without knowing how the government is to spend the money, it would be illegal to allow it to collect taxes.

At the same time, the five petitioners said 22 of the 84 clauses contained in the contested Act were introduced on the floor of the House without public participation.

They argued that the government will not suffer any harm as the 2022 Finance law is still in effect. Mr Amollo stated that the Finance Act has only the start date, meaning it does not expire until it is replaced in a new law.

The lawyer who is also Rarieda MP, said Kenya Kwanza still has Sh3.4 trillion in its pockets.

He added that the Finance Act 2023 promotes involuntary servitude and it is impossible for a Kenyan who has either paid for an item or fare to go reclaim the amount they paid.

“The entire Act suffers unconstitutional infirmities. A total of 22 clauses were introduced on the floor of Parliament without public participation. Public participation is a core of the Constitution. Extending the orders and giving directions to determine the case within 30 days will be the way to go,” said Amollo.

Mr Matindi urged the judge to consider the implications of the new law on Kenyans. He stated that matatus have already hiked fares. He also urged the judge to extend her orders.

“Kenyans will be taxed without a lawful basis. I invite the court to take judicial notice that Matatus intend to increase the fare by 30 percent. If the court agrees with us, Kenyans will not be compensated,” said Matindi.

Okiya said even with the orders of the court, some government agencies had defied and implemented the Act. He stated that he had served Energy Petroleum Regulatory Authority (EPRA) with the orders, however, the agency went ahead to release a new circular with 16 percent VAT on petroleum products.

“The authority of this court is being disobeyed and do not respect this court. This court gave orders, I served orders and the Energy and Petroleum Authority defied the order to an extent has used the suspended Act and gone ahead to hike the prices of fuel,” he said.

Okiya wants EPRA chief executive Daniel Kiptoo jailed for defying court orders. Justice Mugure ordered the responses to the application be filed by close of business Wednesday, July 5.

The Finance Act, 2023 battle ended up being the Tower of Babel on what format would the judge hear the parties.

On one hand, former Attorney General Githu Muigai, who is representing Muturi urged the judge to consider that the petitioners were not candid with the court before it issued the orders.

On the other, Okiya and Otiende asked the judge not to listen to the State as it was already on contempt.

The back and forth between the senior lawyers and litigants took the better part of the morning.

jmuthoni@standardmedia.co.ke