- The court of appeal said some of the sections in the Act were not subjected to fresh public participation.
- "Failure to comply with this constitutional requirement renders the entire Finance Act,2023 unconstitutional," the judges said.
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The court of appeal has declared the Finance Act 2023 saying the process leading to its enactment was flawed.
Justices Kathurima M'inoti, Agnes Murgor and John Mativo said the various sections introduced post-public participation to amend the Income Tax Act, Value Added Tax Act, Excise Duty Act, Retirement Benefits Act and Export Processing Zones Act were unconstitutional as they were not subjected to fresh public participation.
The enactment of the Act elicited 11 constitutional petitions.
The cases were heard together by a three-judge bench led by the late Justice David Majanja.
They subsequently declared as unconstitutional some sections of the Act including the housing levy.
The bench ruled that section 84 of the Finance Act 2023 which amended the Employment Act to introduce the housing levy violated the principles of taxation for making distinction between formal and informal sectors. It was termed as discriminatory.
The bench, however, upheld the 16 per cent VAT on insurance premiums, the digital asset tax, and the tax on betting, saying they were constitutional and within the mandate of the National Assembly.
Aggrieved by the decision, the government appealed.
But the Court of Appeal in its judgement said the question of the housing levy being unconstitutional has already been made insignificant by the enactment of the Affordable Housing Act, 2024.
"Accordingly, it is our finding that for purposes of the issues before us, we are satisfied that there exists no live controversy requiring determination by this Court on the question of the unconstitutionality of section 84 of the Act," they said.
The judges further stated that parliament is obligated to provide reasons for adopting or rejecting any proposals received from members of the public during the public participation process.
"Failure to comply with this constitutional requirement renders the entire Finance Act,2023 unconstitutional."
They said the constitution was violated once the appropriation Bill/Act was approved before the budget proposal had been presented by the CS Treasury in the National Assembly.