[ad_1]
The Supreme Court has stayed an appeals court ruling that struck down the Finance Act 2023, allowing the government to continue collecting taxes under the extended law.
The Supreme Court in its ruling stressed the importance of public interest and said the moratorium would help maintain stability in the ongoing budget and appropriations process.
The judges who participated in the ruling – Chief Justice Martha Koome, Associate Justices Philomena Mwilu, Smokin Wanjala, Njoki Ndung’u, Isaac Lenaola, William Ouko and Mohammed Ibrahim – stressed the urgency of the situation.
“Given the public interest in this matter, we direct that the consolidated appeals be scheduled for hearing as soon as possible after this ruling.” They said.
In a notice of motion filed in the Supreme Court, the state government, led by the Minister of Finance, Attorney General, National Assembly and Kenya Revenue Authority, requested a stay of the Court of Appeal’s decision pending the hearing and determination of the appeal. The appellants argued that the Court of Appeal’s decision created a sticky situation requiring the government to rely on the Finance Bill 2022 to collect taxes in the upcoming financial year. This situation arose because the Finance Bill 2024 had been withdrawn.
The appellants further warned that the repeal of the 2023 Finance Bill would result in a revenue shortfall of Ksh240 billion. They argued that the government could not recover this loss without an urgent stay order from the court. They claimed that this revenue shortfall posed a major challenge to the country’s monetary and fiscal policies.
In addition, the state government warned that repealing the act could trigger a constitutional crisis because it would hamper the government’s ability to legally raise and allocate funds. Such a disruption could lead to the interruption or cessation of basic public services and ultimately a complete government shutdown.
The applicants said that to address the fiscal deficit caused by the funding shortfall, the government may have to borrow, which could significantly increase public debt and inflation. They also expressed concern that the decision would expose the government to numerous legal challenges, including lawsuits from stakeholders affected by the disruption of financial operations.
Meanwhile, the Kenya Revenue Authority (KRA) informed the Supreme Court that the tax collection system, eTims, has already been procured and installed. They explained that repealing the law would require the government to revert to the old system, which would be costly and inconvenient.
In rendering its ruling, the Supreme Court stated: “Given the uncertainty surrounding the revenue raising measures and the likely difficulties in the functioning of a two-tier government as suggested by the applicants, as well as the far-reaching implications of declaring the entire Finance Bill 2023 unconstitutional, we believe that the joint appeal is likely to be rendered ineffective. Furthermore, on the face of it, we are not convinced that the consequences of such a declaration are reversible if the joint appeal is successful.”
According to the ruling, Kenyans will continue to pay all taxes under the controversial law, including the 16% VAT on fuel. The consolidated appeal will be heard before the deputy registrar of the court to ensure compliance with previous directions on the application.
The case will be heard online on September 10 and 11, 2024, starting at 9 a.m. each day.
[ad_2]
Source link
