Salaried workers and their employers will face the double pain of housing levy deductions after judges hearing petitions against the Finance Act 2023 declined to stop government's backdating of the taxes to July 1.
This came even as the petitioners led by Busia Senator Okiya Omtatah decried the ruling terming it a sad day for Kenyans.
The Law Society of Kenya had moved to court alongside several lobby groups seeking orders to suspend the backdating of the housing tax, saying doing so would create a difficulty given July salaries had been processed and paid when there was an active order suspending implementation of the Finance Act.
That had given hope to salaried workers and the employers that only one month deductions would be remitted at the end of August.
Both workers' unions and the Federation of Kenya Employers had earlier voiced reservations against the new tax measures during public participation.
"There will be a double imposition of the housing tax if conservatory orders are not issued against the retrospective dating of the levy. We are asking the court to find that the housing tax cannot be implemented for the period that there was an order suspending the Finance Act," LSK president Eric Theuri said.
But judges David Majanja, Christine Meoli and Lawrence Mugambi who are hearing the petitions summarily dismissed all applications that had been made before them.
Seven human rights groups including the Kenya Human Rights Commission, Katiba Institute, The Institute for Social Accountability, Transparency International Kenya, International Commission of Jurists, Siasa Place and Tribeless Youth moved to court last week under a certificate of urgency saying backdating the taxes would have adverse effects on the health and livelihoods of Kenyans, if conservatory orders were not issued.
Through lawyer Dudley Ochiel, the petitioners joined ranks with LSK asking the court to suspend particular sections of the Finance Act, especially those that introduce the housing tax and the government decision to have it backdated.
"Even the Court of Appeal judges who vacated earlier High Court orders that had suspended implementation of the Finance Act noted that this court can still suspend particular clauses of the Finance Act," Ochiel argued.
He said the government issued a notice backdating the taxes after the Court of Appeal directions and that it was the discretion of the High Court bench to rule on the applications.
Lawyers representing the Attorney General for the government vehemently opposed the applications saying the judges could not issue any other conservatory orders because the High Court had dealt with such applications.
That appeared to have swayed the judges who declined the petitioners' requests.
"Having considered all the applications, the court has come to the conclusion that we are not issuing any conservatory orders today," Justice Majanja said.
He is the presiding judge in the matter.
The court directed parties that wish to amend their affidavits to do so in three days before responses are filed in another seven days ahead of the main hearing of the consolidated petitions on September 13.
But Omtatah has vowed to continue fighting to have the implementation of the Finance Act stopped saying he has already lodged an appeal at the Supreme Court.
He wants the apex court to stay the decisions of appeal judges Mohammed Warsame, Kathurima M’Inoti and Hellen Omondi who lifted orders that had stopped the Finance Act implementation.
The appellate judges ruled that the Finance Act has a life span of 90 days beyond which the next budgetary cycle is set in motion.
“We have no doubt in our mind that the Finance Act and the Appropriation Act are interdependent. While the former provides for generation of the funds, the latter provides for the expenditure. There can be no expenditure where the mode of generation of the funds has not been provided for,” the judges said as they vacated the High Court orders.
Omtatah believes there are serious errors in that ruling.
"They are basically saying that paying taxes is more important than keeping the law. I have filed my appeal at the Supreme Court and the fight goes on until the Finance Act is suspended," Omtatah told journalists.
Earlier in court, the Busia senator had taken on judges Majanja, Meoli and Mugambi telling them that their ruling was against public interest.
Omtatah, who wants the Finance Act declared null and void for not having the input of the Senate, had sought to have National Assembly Speaker Moses Wetang'ula and his Senate counterpart Amason Kingi cross-examined over their affidavits in the case.
Both Wetang'ula and Kingi have sworn affidavits saying there was a concurrence between the Senate and the National Assembly in passing the Finance Bill, 2023 which has since been signed into law.
But the judges declined that request.
"That ruling is not in my favour and you won't be serving justice if we continue like this," Omtatah told the bench.
"Please Mr Omtatah, we have made a ruling," Justice Majanja said.
But an angry Omtatah went on.
"The speaker has told lies. Lies which are very fundamental to this hearing. He has even claimed that I got documents unprocedurally yet I am a sitting senator. It is only fair he comes here to be cross-examined."
He was however shut down by Majanja who insisted the court had made its ruling as regards that application and that whether the affidavits contain lies or otherwise will be canvassed during the main hearing of the consolidated petitions.
As things stand, employers will have to deduct twice the 1.5 per cent of employees gross earnings and remit it to Kenya Revenue Authority for the housing tax when they process August salary payments.