Kenyan court lifts suspension of tax hikes until further notice

A Kenyan court on Friday 28 July 2023 lifted the suspension of controversial tax hikes that have sparked opposition protests, allowing the government to raise levies until a final ruling is issued.

President William Ruto last month signed into law a finance bill expected to generate more than $2.1 billion for the government’s depleted coffers, but the taxes threaten to pile more pressure on a population already struggling with high inflation.

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High court suspends implementation

The Nairobi high court had suspended implementation of the legislation after a senator filed a case challenging its constitutional legality. But on Friday, the court of appeal lifted the suspension, pending a final decision on the case.

“The order prohibiting the implementation of the Finance Act 2023… is hereby lifted pending the hearing and determination of the appeal,” a three-judge bench ruled.

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The decision comes after months of anti-government protests by opposition leader Raila Odinga in part over a cost-of-living crisis, with the demonstrations spiralling into looting and deadly clashes with police.

Provision for new taxes?

The unrest has sparked alarm among Kenyans and the international community, which has urged the two sides to negotiate a political solution. The Finance Act provides for new taxes or increases on basic goods such as fuel and food and mobile money transfers, as well as a controversial levy on all taxpayers to fund a housing scheme.

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The government says the taxes will help create jobs and reduce public borrowing. Ignoring the earlier suspension orders, Kenya’s energy regulator last month announced a hike in pump prices after the doubling of VAT to 16 per cent as stipulated in the law.

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