The High Court in Kenya’s capital Nairobi has suspended the implementation of new taxes scheduled to take effect from Saturday, July 1.
A Kenyan senator, Okiya Omtatah, had moved to court to challenge the Finance Act 2023, which introduced new or higher taxes.
Omtatah, who represents the County of Busia in Western Kenya, argued that the introduction of the new taxes was in breach of the constitution, and that it did not consider the individual contracts Kenyans signed with their employers.
On Monday, President William Ruto assented to the Finance Bill 2023 after it was approved by Kenya’s National Assembly.
Higher income tax
The law introduced a housing levy that would see employees in the formal sector ceding 1.5% of their salaries towards a national housing scheme.
It also raised the income tax on salaried people earning between Ksh500,000 ($3,580) and Ksh799,999 ($5,725) per month – from 30% to 32.5%.
According to the new law, Kenyans with gross monthly salaries above Ksh800,000 ($5,727) are supposed to pay a new income tax of 35%.
The law also hiked the Value Added Tax (VAT) charged on petroleum products from 8% to 16%.
Omtatah has challenged the new taxes in court, saying they are overburdening Kenyans, who are already bearing the brunt of a high cost of living.
“Forcing employees to contribute an amount of money based on the applicable blanket deductible percentage without consideration of their existing contractual obligations on their salaries is not reasonable,” Omtatah said in his petition.
Senate ‘not involved’
He further argued that Kenya’s senate was not involved in the lawmaking process, which, according to him, amounts to contravention of the constitution, since the Finance Act touches on county operations.
Judge Mugure Thande certified Omtatah’s petition as urgent, and suspended the implementation of the new law until the legislator’s case is heard and determined.
This came as Kenya’s Energy and Petroleum Regulatory Authority (EPRA) was preparing to revise fuel prices on Friday after the Finance Bill 2023 was signed into law.
