The Supreme Court has delivered a mixed verdict on the contentious Finance Act 2023, overturning a lower court’s decision that had declared the entire law unconstitutional while maintaining the invalidity of several specific provisions.
In its ruling on Tuesday, the Supreme Court determined that while most of the Act could stand, certain sections – including amendments to the Kenya Roads Act and the Unclaimed Financial Assets Act – were unconstitutional as they fell outside the scope of a money bill.
The court’s decision comes after months of legal battles over the legislation, which was enacted in June 2023 and introduced significant changes to Kenya’s tax regime. The case consolidated multiple appeals challenging the Act’s constitutionality, both in terms of its content and the legislative process that led to its enactment.
The Supreme Court dismissed claims that the Finance Bill required concurrent approval from both houses of Parliament, affirming that “the Speaker of the National Assembly and the Speaker of Senate concurred that the Finance Bill, 2023 does not concern County Government.”
Significantly, the court addressed the controversial question of public participation in the legislative process. While it determined that Parliament is not required to undertake fresh public participation for amendments made after initial public consultations, it emphasized the importance of reasonable measures to consider public input.
“While there is no express obligation on Parliament to provide reasons for accepting and/or rejecting proposals/views made during a public participation exercise, as a matter of good practice, it must nonetheless put in place reasonable measures to ensure it considers the proposals, views, suggestions, and comments received during such an exercise,” the court stated.
The ruling identified 15 sections of the Act as containing “substantive amendments,” including Sections 18, 21, 32, 38, 44, and others. However, it determined that two provisions – Sections 23 and 79 – were merely “minor/technical amendments.”
On the controversial Affordable Housing Levy, which had sparked significant public debate, the court declared the question moot, effectively leaving previous legal determinations on this matter unchanged.
The Supreme Court also established clear guidelines for future constitutional challenges to legislation, outlining seven key considerations courts must weigh when determining whether to declare a statute unconstitutional. These include the presumption of constitutionality and the burden of proof lying with the party alleging inconsistency.
In its recommendations, the court called for significant reforms to the legislative process, stating that “Parliament [should] put in place a legislative framework through statute for public participation as anticipated under Article 118(1)(b) of the Constitution.”
The court also emphasized the need for greater transparency, recommending that “Parliament establish measures to ensure that all versions of a Bill, at every stage of the law-making process, are accessible to the public for their information and scrutiny.”
The ruling provided detailed criteria for courts to consider when suspending declarations of invalidity, including the potential for legal vacuums, administrative confusion, and the balance between immediate constitutional relief and disruption to government operations.
In its final orders, the court directed each party to bear their own costs, citing the public interest nature of the case. The cross-appeals by various respondents were dismissed.
