Economy
Treasury CS appeals to quash order blocking Finance Act
Tuesday July 18 2023
National Treasury and Economic Planning Cabinet Secretary Njuguna Ndung’u poses for a photo with a briefcase containing the 2023/2024 budget statement before proceeding to Parliament Building on June 15, 2023. PHOTO | LUCY WANJIRU | NMG
Treasury Cabinet Secretary Prof Njuguna Ndung’u has moved to the Court of Appeal seeking to lift the suspension of the Finance Act, 2023 arguing that the freeze is affecting government operations.
The High Court stopped the Treasury from implementing the Act on June 30, stating that Kenyans might be subjected to unlawful taxes, in case the petitions challenging the Act are successful.
The CS, however, says the government stands to lose approximately Sh211 billion in the current financial year, which will make it difficult to implement the 2023/24 budget as planned. Prof Ndung’u said some projects have to be suspended.
“The Finance Act, 2023 was enacted to boost revenue collection which is the core source of funding for the implementation of the national budget. Its suspension will make the government of Kenya incapable of meeting its financial commitments and discharging its executive authority,” the CS said.
Prof Ndung’u through Attorney General Justin Muturi further said the government stands to lose revenue, which cannot be recoverable and yet it has an appeal with high chances of success.
“The government of Kenya has to borrow to bridge the gap in order to operate. As there are no saving provisions in the Finance Act, 2023, the repealed provisions of the Finance Act, 2022 have the effect of affecting revenue collection leading to service disruptions for already budgeted revenue,” Prof Ndung’u said in an affidavit.
High Court judge Mugure Thande ruled last week that notwithstanding the presumption of constitutionality of legislation, there is merit in granting conservatory orders as prayed.
Prof Ndung’u says in the application that the fiscal plan has been disrupted as the forgone collections have to be factored in the expenditure and projects that would go unfunded.
“The suspended Act collaterally suspends the Appropriation Act at both county and national levels. This suspension affects debt service and access to consolidated services,” he said.
He added that the suspension of the Act has caused confusion as the implementation was set to begin on July 1 and measures had been put in place to facilitate its implementation.
The CS says the Energy and Petroleum Regulatory Authority (Epra) for example, issued directives on June 30 at 5pm ahead of the price change.
The application has been opposed by Busia Senator Okiya Omtatah who says the suspension of the Act does not affect the lawful revenue-raising measures.
“I aver that it is only the extra tax revenues, over and above the revenues in the Finance Act, 2022 that is affected by suspending the Finance Act, 2023,” he said.
