Kenya's top court suspends ruling to annul 2023 finance act

Kenya’s Supreme Court on Tuesday suspended a lower court ruling that annulled a controversial budget bill enacted last year, saying it wanted to ensure “stability” in government finances.

The nation’s top tribunal ordered a stay on the July 31 ruling by the Court of Appeal that had dealt a fresh blow to President William Ruto’s cash-strapped administration.

The appeal court had ruled that the 2023 Finance Act was unconstitutional, raising concerns about the government’s ability to continue raising tax revenue.

It followed Ruto’s decision in June to scrap the equally contentious 2024 finance bill in the face of widespread and sometimes deadly protests over controversial tax hikes.

But the Supreme Court on Tuesday issued a conservatory order “suspending and staying the declarations” in the July 31 decision so as to “maintain stability in the budget” before it makes a final determination.

New hearings will be held on September 10 and 11.

The appeal court had found that the 2023 act was “fundamentally flawed and consequently unconstitutional” because of failings in the parliamentary procedures to enact the legislation.

Ruto signed the 2023 legislation into law in June last year in a bid to raise more than $2.1 billion to help service Kenya’s $78 billion debt.

The bill included new and increased taxes on basic goods such as fuel, food and mobile money transfers, as well as introducing a controversial levy on all taxpayers to fund a housing scheme.

It triggered months of protests last year which spiralled into looting and deadly clashes with police, raising concerns about the stability of the East African powerhouse.

This year’s finance bill and its provisions for more tax hikes to raise another $2.7 billion in revenue triggered a similar wave of protests — this time led largely by young Gen-Z Kenyans.

Facing the worst crisis of his nearly two-year presidency, Ruto abandoned the 2024 legislation after demonstrators stormed parliament and police fired live bullets on protesters.

Dozens of people have been killed since the rallies began in mid-June, with police accused by rights groups of using excessive force.

In addition to dropping the latest proposed tax hikes, Ruto sacked almost all his ministers and replaced them with a new “broad-based” cabinet including four opposition stalwarts.

One of the four, Finance Minister John Mbadi, said Sunday that the government planned to raise about $1.2 billion by reinstating some unpopular taxes contained in the abandoned 2024 finance bill.