Kenya: Supreme court reinstates finance law which triggered deadly protests

Kenya’s Supreme Court overturned an appeals court decision on Tuesday that had nullified the 2023 finance law, a victory for President William Ruto’s administration.

The government had been relying on the 2023 law to continue tax collection after withdrawing this year’s finance bill due to widespread protests.

The Supreme Court stated, “we hereby set aside the Court of Appeal’s finding declaring the entire Finance Act 2023 unconstitutional.”

The 2023 finance law, which included increased fuel taxes, a housing levy, and higher top income tax rates, triggered opposition-led protests and unrest, leading to over 60 deaths in June and July.

In response, Ruto withdrew this year’s bill, delaying an International Monetary Fund (IMF) disbursement. Ruto maintains the tax hikes are crucial for funding development and addressing Kenya’s debt.

The IMF’s executive board is set to review the new funding tranche on Wednesday, following Kenya’s compliance with the Fund’s requirements.

Insight into Kenya’s Finance Law

The Finance Law, is also known as the Finance Act 2023.

Key provisions include a 3% Digital Services Tax (DST) on digital transactions, removal of VAT exemptions on basic commodities like bread and medicine, increased excise duty on fuel, tobacco, and alcohol, and changes to income tax rates and brackets.

Critics argue that the new taxes will increase the cost of living, harm small businesses, and slow economic growth.

Civil society organizations, consumer groups, and business associations have expressed opposition, citing lack of public consultation and potential negative impacts.

Some lawmakers have called for amendments or repeal.

The government defends the law, stating it aims to increase revenue and reduce debt, achieving fiscal stability.

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