(Bloomberg) -- An appeals court in Kenya ruled that a series of taxes introduced in 2023 were unconstitutional, potentially blocking a key source of budget financing for the government.
The taxes contained in the Finance Act 2023 are separate from another set of revenue-raising measures President William Ruto’s administration sought to impose this year that led to deadly protests.
A three-judge bench ruled on Wednesday that the taxes approved last year breached Kenya’s budget-making laws and that the process to enact the taxes was “fundamentally flawed” and unconstitutional, according to an emailed copy of the ruling.
Those taxes were expected to raise about 211 billion shillings ($1.6 billion) for the fiscal year that ended last month. Ruto has had to abandon a different set of measures geared at collecting 346 billion shillings in the current budget year after weeks of demonstrations that at one point had protesters storm parliament.
Some of the revenue-raising measures in the 2023 law included doubling value-added tax on fuel to 16%, higher excise duties on fees charged for money-transfer services, a 3% tax on digital assets, and a hike in the rate for the top salary-tax band to 35% from 30%.
It also included a mandatory 1.5% housing levy for employees that had to be matched by employers. The government should be able to continue with collecting the levy as it enacted separate legislation in response to a court ruling that made collections illegal.
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