Kenyan Court Overturns 2023 Finance Law in Setback for President Ruto

Kenya's Court of Appeal declared the 2023 finance law unconstitutional, dealing a significant blow to President William Ruto's administration. The ruling, issued on Wednesday, came after Ruto's government withdrew this year's finance bill following deadly protests. The finance bills, presented at the start of each financial year, outline the government's revenue-raising measures, including tax hikes and new levies.

The 2023 finance law faced legal challenges and political opposition-led protests, which turned violent after the government doubled the value-added tax on fuel, introduced a housing tax, and raised the top personal income tax rate. The Court of Appeal, in a ruling by a three-judge bench, declared the entire Finance Act, 2023, unconstitutional due to non-compliance with constitutional requirements.

This verdict overturned a previous High Court ruling from last year that mostly upheld the finance bill, except for the housing levy. Following that ruling, the government enacted a new law to continue collecting the housing tax, which is also being challenged in court.

The government, relying on the 2023 finance law for tax collection after withdrawing this year's bill, has not commented on the ruling. The option to appeal at the Supreme Court remains. Efforts to reach Chief Minister Musalia Mudavadi and Finance Ministry official Chris Kiptoo for comments were unsuccessful.

In response to youth-led violent protests, Ruto fired all ministers except one and nominated a new finance minister. He defends the higher taxes as necessary to fund development programs and manage Kenya's heavy public debt, which exceeds levels recommended by the IMF and the World Bank. The government has submitted a new economic plan to the IMF, with a board review expected at the end of August.