The Supreme Court Friday dismissed a petition challenging the lifting of the High Court’s conservatory orders which had earlier suspended implementation of Finance Act 2023.
Senator Okiya Omtatah of Busia and three others had appealed against an Appellate Court ruling that lifted injunctions preventing the implementation of the contentious Finance Act 2023.
The four petitioners, Eliud Karanja Matindi, Benson Odiwuor Otieno, Omtatah, and Brian Angima Oigoro, who are unhappy with the ruling, appealed at the Supreme Court.
Seven judges at the Supreme Court issued the ruling on Friday.
“The applicants’ Notice of Motion dated 5th August 2023 be and is hereby dismissed,” read part of the ruling.
The judges include Chief Justice Martha Koome, DCJ Philomena Mwilu, Mohamed Ibrahim, Smokin Wanjala, Njoki Ndung’u, Isaac Lenaola, and Willian Ouko.
The Appellate Court temporarily lifted conservatory orders barring the implementation of the contentious Finance Act 2023 on Friday, clearing the way for the government to implement critical taxes that had been put on hold following the Bill’s suspension late last month.
The decision by a three-judge bench was preceded by a petition from Treasury CS Njuguna Ndung’u, who claimed that the freeze was costing the government half a billion shillings per day.
Meanwhile, Kenyans will have to dig deeper into their pockets as the government implements critical taxes to fund the fiscal year 2023-2024 and reduce overborrowing.
The 1.5 percent Housing Levy, which is now in effect unless there is an appeal and stay order at the Supreme Court, is one of the immediate consequences of the court decision.
High-income earners of more than Sh500,000 a month will be charged tax at 32.5 percent for monies up to Sh800,000, while those above Sh800,000 will be charged 35 percent on the extra cash.
Previously the maximum tax on salary was 30 percent.
The court ruling also sets the energy and petroleum regulatory authority free to impose the VAT Charge of 16% on fuel.
Despite the previous stoppage, EPRA had already imposed the levy meaning a litre of petrol will continue retailing at Ksh.194 in Nairobi until the next review mid-next month.
At the same time, the turnover tax has been raised to 3% from 1% previously.
This will be levied on all businesses with annual revenues ranging between Ksh.1 million and Sh25 million. The previous limit was Sh50 million.
Digital content creators will also be charged a withholding tax of 5 percent.
The government intended to raise Sh311 billion through the Finance Act of 2023, which included new taxes and increased levies on existing ones.
Some of that may have been missed in the 27 days before the lifting of the conservatory orders.
Employees who had already been paid their July salaries they may be required to pay back the housing levy and any extra taxes in subsequent months.
Employers are required to remit tax deductions on the 9th of the subsequent month.
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