Omtatah sues over Ruto Finance Bill, claims Kenya's debt inflated by Sh3.7trn

Okiya Omtatah files case challenging Finance Bill

President William Ruto’s first budget as the head of State has a major hurdle to overcome. This is after Busia Senator Okiya Omtatah yesterday filed a case challenging the Finance Bill that will make the budget functional, saying a number of its provisions are unconstitutional.

In a suit lodged at the Constitutional and Human Rights Division of the High Court in Nairobi, Mr Omtatah wants 13 provisions of the bill nullified. 

If Mr Omtatah’s case succeeds, key measures that President Ruto intends to use to finance a Sh3.64 trillion budget for the next financial year will be thrown out.

Mr Omtatah is the first petitioner in a suit that has a total of five petitioners. The four others are Mr Eliud Karanja Matindi (who is based in the United Kingdom), Mr Michael Kojo Otieno, Mr Benson Odiwuor Otieno, and Mr Blair Angima Oigoro.

The sued parties are the National Treasury Cabinet Secretary, the Attorney-General, and the National Assembly. The commissioner-general of the Kenya Revenue Authority (KRA) is named as an interested party.

The petitioners argue that President Ruto is forcing the passing of the Finance Bill, 2023, which they say amounts to coercing Kenyans to pay tax irregularly. They have enumerated over 30 articles of the Constitution that the bill will violate if passed.

As he pleads with the High Court to certify the suit as urgent, Mr Omtatah argues that Kenyans stand to suffer immensely.

“Unless the application is urgently heard and determined, (Mr Omtatah) and the people of Kenya will suffer great loss and damage as the impugned excise duties will continue to be imposed on Kenyans,” he states in his affidavit. 

He also wants Chief Justice Martha Koome to, on a priority basis, formulate a bench with an uneven number of judges “being not less than three”.

The petitioners are urging the court to prohibit the National Assembly Speaker from transmitting to the President the Finance Bill 2023 if it contains 13 sections they want to be struck out by a court order.

One of those is the 76th section which states that every employee will have three per cent of their monthly salary deducted in favour of the National Housing Development Fund. 

Socio-economic rights

“It threatens socio-economic rights (Article 43 of the Constitution) to the extent that, if made law, the fund will … reduce workers’ purchasing power as it increases business operating cost.”

“There is no public purpose or public interest being served by requiring a three per cent reduction in basic salary for employees and a three per cent contribution from employers to an amorphous fund to hold private and not public funds,” they add.

Further, the petitioners say, there is “already a law which allows people to voluntarily join an affordable housing scheme”.

The petitioners also want an annulment of section 52 of the Finance Bill 2023 which allows KRA the power to register security against a tax defaulter’s property without notifying the taxpayer.

“The provision is contrary to Articles 48 and 50 of the Constitution of Kenya 2010 and international human rights standards which provide for the right to a fair hearing and have access to information necessary to defend oneself,” the petitioners argue. 

The petitioners also challenge the 28th section of the bill that seeks to increase the value-added tax of petroleum products from eight to 16 per cent.

“(The) increase will impact and further push up the already high cost of living. And that poses a threat, resulting from ripple effects of the high costs of essential products, to the right to live a humanly dignified life (per Article 28 of the Constitution) and to socio-economic rights (per Article 43 of the Constitution). The tax will also lead to very high costs of production in the country which will lead to deindustrialisation due to investors moving to invest and grow their monies in more competitive economies,” the petitioners argue.

There is also section 56 of the bill that gives KRA the power to hold on to overpaid taxes to deduct from future dues that the petitioners want to be struck out.

“If enacted into law, it will arbitrarily deprive taxpayers who have overpaid their taxes a right to their property,” argue the petitioners. “It is unacceptable that KRA is not under obligation to pay interest on the overpaid tax amounts it holds for future tax liabilities.”

Besides seeking an order to annul the 13 sections of the Finance Bill 2023, the petitioners also want the court to issue an order compelling the Executive to audit the public register.

The audit, they argue, will “separate genuine sovereign debts which were authorised by Parliament and should be repaid by Kenyans from odious debts which were incurred without parliamentary approval and/ or benefitted private entities who should repay them”.

Speaking after filing the case, Mr Omtatah said the actual figures of the national debt should be made public for auditing.

“Otherwise, Kenyans will be taxed to pay private dates,” said Mr Omtatah. He claimed that monies borrowed overseas are stashed in private offshore accounts and now “Kenyans are being asked to pay those debts which financed non-existent development projects”.

If the petitioners’ case succeeds, a declaration will come from the court that there are natural law and constitutional limitations on the power of the political arms of the government to impose taxes. These limitations, they argue, protect taxpayers from unconstitutional taxation.

There will also be a declaration that the National Assembly failed in its duty to uphold the Constitution by publishing the Finance Bill.

Equally, if the petition goes the way of the petitioners, there will be a declaration that some of the amendments it proposes to the Statutory Instruments Act,2013, and the Employment Act, 2007 make it cease to be a “money bill”.

There will also be a declaration that the section on betting and gaming will need the concurrence of not just the National Assembly but also the Senate.