High Court declares Nairobi finance law unconstitutional
The City Hall building in Nairobi as pictured on April 19, 2021.
What you need to know:
- Judge Anthony Mrima declared the Act unconstitutional, null and void after allowing a petition filed by two private vehicle parking service providers, Kaps and Paytech.
The High Court has quashed the Nairobi City County Finance Act, 2018, throwing in jeopardy the revenue collected from traders and organisations based on charges set in that law.
Judge Anthony Mrima declared the Act unconstitutional, null and void after allowing a petition filed by two private vehicle parking service providers, Kaps and Paytech, challenging the legality of the law and hiking of business licence fees.
The judge said the Act was passed in violation of the Constitution and contravention of the Nairobi City County Assembly Standing Orders for want of publication in the Kenya Gazette and the County Gazette.
The law was also found to be illegal because the county assembly passed it without reasonable public participation and stakeholder consultations.
Companies' arguments
The companies contended that the hiking of license fees was meant to punish them as they compete with the county government in provision of parking services.
They said the law had increased the license fees to be paid by them by over 100 per cent.
The chargeable fees were raised from Sh30,000 and Sh100,000 to Sh200,000 and Sh500,000, the companies said, adding the increment was hefty, unfair, punitive, unbearable and excessive, and as such, they predispose the companies and other stakeholders to massive losses.
They also indicated that the imposition of the increased parking rates as contained in the Finance Act was catastrophic as it constituted clear prejudice to the national economic policies, economic activities across county boundaries and the national mobility of goods, services, capital or labour.
Another contention was that the Act was passed outside the 90-day timeline provided for by the Constitution, the Public Finance Management and the Nairobi City County Assembly Standing Orders, 2017.
The organisations also contended that the Nairobi Finance Act, 2018 was not published in the County Gazette and the Kenya Gazette.
Further, that enactment of the Finance Act, 2018 was not preceded by the views of the Cabinet secretary and the Commission on Revenue Allocation.
Public participation
Justice Mrima, while allowing the petition, found the actions of the county government and the county assembly variously infringed articles of the Constitution by not according the members of the public a reasonable opportunity to participate in the process of the enactment of the law.
"I find that the uploading of the Bill onto the county website and conducting two meetings in two out of the 85 wards in Nairobi County, if at all the meetings were conducted, still did not attain the threshold of according the public reasonable opportunity to participate in the legislative process," said Justice Mrima.
The two meetings were held at Waithaka Social Hall in Waithaka Ward Dagoretti South Constituency and Jericho Social Hall in Makadara.
The judge also found the county government and the county assembly did not give any reason why they only presented the Finance Bill in the English language, while they were bound by Article 7 of the Constitution to, unless for reasons to be given, present is in Kiswahili as well.
However, he rejected arguments by the petitioners that the licence fees contained in that law were discriminatory and punitive.
The court heard that out of the affected sectors in the county, the petitioners were most affected.
The companies had said the exorbitant increase in licence fees was prejudicial to national economic policies and economic activities across Nairobi County.
But Justice Mrima said the differential treatment was not discriminatory and that increases of fees and levies across all sectors cannot be expected to be similar.
"The contention by the petitioners that the increase of fees and levies in their sector ought to have corresponded with the increase of fees and levies in the other sectors cannot hold. Every sector is different unless the correlation and similarity is demonstrated,” the judge said.
“The petitioners are members of the same sector and are all providing similar services. There is no claim that some members within the petitioners’ sector were treated differently.”
He stated that the companies failed to demonstrate that the differential treatment undertaken by the county government and county assembly constituted unfair discrimination.
