KRA in dilemma over ruling on illegal laws

KRA, Times Towers

Times Tower in Nairobi, the headquarters of the Kenya Revenue Authority.

Photo credit: File | Nation Media Group

All taxes collected in the last two financial years, as well as those that the government continues to enforce, are illegal.

This is the import of yesterday’s judgment nullifying 23 laws enacted by the National Assembly without the concurrence of the Senate.

And the government’s spending over the same period is illegal too, as the laws sanctioning the withdrawal from the Consolidated Fund were revoked as well.

Among the laws that the High Court annulled is the Finance Act, 2018, a law enacted every year detailing the government’s taxation measures to finance the budget.

The Act that was revoked covered the 2018/19 financial year and, with subsequent laws for the 2019/20 and 2020/21 financial years having gone through similar circumstances, it means that the Kenya Revenue Authority is collecting taxes illegally.

Yesterday, the Constitutional Court admonished the National Assembly for acting as if it alone constituted Parliament, yet the constitution interpreted that to include the Senate.

While voiding the 23 laws, Justices Jairus Ngaah, Anthony Ndung’u and Teresiah Matheka, said the concurrence of the Senate was never sought: “A declaration is hereby issued that it is mandatory and a condition precedent for any Bill that is published by either House to be subjected to a concurrence process to determine in terms of Article 110 (3) of the Constitution whether the Bill is special or an ordinary Bill and that such determination is not dependent on “a question arising” as to whether the Bill is one that concerns counties.”

Enact laws

Lawyers representing the National Assembly had cautioned the court to consider the repercussions that may ensue if the Acts are nullified, more so considering the sheer numbers involved.

“We are of the view that this is not the proper forum to ask that question. Had the National Assembly paused and asked itself the same question before it set out to enact laws contrary to the express provisions of the Constitution, it would have appreciated the grave consequences that were bound to arise from its actions. As a court, we can do no more or less than what we are duty bound to do which is to declare the laws what they are-a nullity.”

“Kenyans are free to seek a refund of their taxes because they were taxed wrongfully,” Nandi senator Samson Cherargey said yesterday moments after the judgement.

Describing the judgment as a win for constitutionalism, the senator, who once chaired the Senate Justice Committee, said the verdict was proof that the President has constantly been misled when assenting to Bills.

“The President’s legal advisors are an embarrassment and they should be fired for misleading the Head of State,” he said.

Tharaka Nithi senator Kithure Kindiki described the judgement as a “landmark and historic” decision and a breakthrough for devolution. Makueni senator Mutla Kilonzo Junior said it has restored the Senate’s position as the upper House.

Collecting taxes

“The Senate has been elevated to where it should be,” Mr Kilonzo Junior said. Besides collecting taxes illegally, the decision by the court also means that the National Government-Constituency Development Fund (NG-CDF) is equally illegal as is the funds appropriated to it since 2015 when the law was enacted.

Other similar laws that have been nullified are the Appropriations Act, 2018, the Supplementary Appropriation Act, 2018; the Appropriations Act, 2019, the Supplementary Appropriation Act, 2019, the Equalisation Fund Appropriation Act, 2018.

The Appropriation Act authorises the withdrawal of public money from the Consolidated Fund and with the findings of the court, it means that all the funds withdrawn in the stated years were done illegally.

NGCDF is the successor of the CDF which was established in 2003 but which the High Court in 2015 ruled illegal.

Similarly, the amendment to the Sports Act that repealed provisions on National Sports Fund (NSF) was also nullified.

In the amendments, the National Treasury established the Sports, Arts and Social Development Fund to support the youth, women and persons living with disabilities in areas like sports and arts.

The Fund replaced the National Sports Fund (NSF), which was abolished.