Treasury appeals to Supreme Court to reinstate Finance Act 2023

The Treasury has pleaded with the Supreme Court to overturn a decision of the Court of Appeal quashing the Finance Act, 2023 arguing that the government will lose Sh214 billion if the judgment is upheld.

Appearing before the apex court on Tuesday, Treasury Cabinet Secretary John Mbadi, through senior counsel Githu Muigai, said the nullification of the law by the appellate court would lead to adverse consequences as the benefits intended to be conferred to the public through revenue generated from taxes, would be lost.

Prof Muigai added that the Act was enacted to rationalise tax policies and the fiscal consolidation framework through the amendment of statutes, thereby facilitating the realisation of the government’s medium-term agenda.

The submission was supported by the National Assembly, through lawyer Issa Mansur, who said the declaration of the Finance Act, 2023 as unconstitutional due to a lack of detailed justification for accepting or rejecting public input during the participation process, marked a significant departure from established legal precedent.

Mr Mansur said the National Assembly conducted adequate public participation and incorporated some of the proposals given during the hearings.

“The Finance Bill, 2023 was published in the Kenya Gazette Supplement No. 56 on 28th April 2023 and tabled in the National Assembly for the first reading and committal to the relevant committee on 4th May 2023, after which the National Assembly sent out notices through print media calling for memoranda. Members of the public and stakeholders were accorded sufficient opportunities to present their views during public hearings,” he said.

Mr Mansur said the National Assembly received approximately 161 structured submissions, over 300 general email submissions, and more views during the public hearing exercise at the Kenyatta International Convention Centre (KICC), where over 800 participants showed up.

“All the submissions received were diligently reviewed and deliberated on by the Finance and National Planning Committee informing most of the amendments that were adopted into the Finance Act, 2023,” he said.

The lawyer said that only 13 proposals were rejected by the departmental committee on Finance, which represents a mere 3 percent of all the proposals, and it was, therefore, wrong for the court to nullify the entire Act because of failure to give reasons in the 13 proposals.

Mr Mansur submitted that the Court of Appeal erred in finding that Parliament included 18 new provisions, which were not subjected to public participation.

The lawyer said the court failed to appreciate that the amendments were introduced per the Standing Orders, informed by submissions from public participation, and considered by the House.

“By requiring every amendment introduced post public participation to undergo a full formal process as if it were a new Bill, the judgment of the Court of Appeal creates unreasonable and in respect of the Finance Bill, impractical procedural bottlenecks especially considering the timelines,” he added.

The court heard that the appellate court also failed to appreciate the practical implications of its decision as requiring every amendment to undergo public participation and additional readings (first, second, and third reading) would bring the legislative process to a halt.

“The judgment of the Court of Appeal failed to appreciate that public participation is intended to inform the legislative process, not to dictate it,” Mr Mansur told Chief Justice Martha Koome, Deputy CJ Philomena Mwilu, and Justices Mohammed Ibrahim, Smokin Wanjala, Njoki Ndung’u and William Ouko.

He said the decision seems to misconstrue the role of public participation by implying that every public view must be individually addressed and justified.

Mr Mansur said requiring fresh public participation for every amendment arising from the initial public participation process would create an unending cycle, severely hampering the legislative process.

“Such a requirement would effectively negate the purpose of the initial public participation, as any changes resulting from that process would trigger a new round of consultation. To require Parliament to consult the public on their views would result in an unending cycle of consultation on legislation. This was not the constitutional intent,” he said.