Parliament Buildings in Nairobi County on August 8, 2024.
The National Assembly has moved to repeal the Provisional Collection of Taxes and Duties Act, seven years after the High Court declared it unconstitutional.
A proposed law before the National Assembly — the Provisional Collection of Taxes and Duties (Amendment) Bill 2025 — seeks to clean the country’s statute books by deleting the law that is no longer operational.
“The principal object of the Bill is to repeal the Provisional Collection of Taxes and Duties Act. The repeal has been occasioned by the declaration of the High Court in a petition that the Act was unconstitutional,” the Bill reads.
The Bill is in the name of the Leader of the Majority in the National Assembly Kimani Ichung’wah (Kikuyu), who by his leadership position, moves government Bills on the floor of the House.
The Provisional Collection of Taxes and Duties Act was enacted in 2018. It gave the government through the Kenya Revenue Authority (KRA), the legal mandate to collect taxes to partially implement the budget as highlighted by the National Treasury Cabinet Secretary pending the enactment of the Finance Act.
The court order affected the Value Added Tax (VAT) on some goods and other sin taxes that previously came into effect at midnight of the budget highlights presentation to the National Assembly by the National Treasury CS before the law was changed.
This affected taxes on Kerosene, bottled water, mobile money transfers, and betting proceeds among others, which were to be collected before the Finance Act came into force by September 30 every financial year.
The collection of revenue by the taxman was based on the fact that different sections and schedules of the Finance Act come into force on diverse dates- immediately after the budget is read.
However, just days after its enactment, social activist Mr Okiya Omtatah, before he was elected Busia Senator in 2022, successfully challenged it in court because it violated the constitution.
On September 18, 2028, High Court Judge Winfrida Okwany after hearing the case, established that the law was unconstitutional.
“Having considered the petition, I am persuaded that the Provisional Collection of Taxes and Duties Act 2018 and the Provisional Collection of Taxes and Duties Order 2018 fail the constitutional test of validity,” Justice Okwany ruled.
“A declaration is issued that the Provisional Collection of Taxes and Duties Act is unconstitutional and therefore, invalid, null, and void,” the Judge ordered.
Omtatah had argued that the government cannot budget for what it does not have or has not projected to collect, which led to the declaration of section 41 of the PFM Act that provided for the enactment of the Finance Bill by September 30, every year, unconstitutional.
The section, had prior to its amendment, stated that not later than 90 days after the passing of the Appropriation Bill by June 30th every year, the National Assembly shall consider and approve the Finance Bill with or without amendments.
But as Mr Omtatah questioned the validity of the Finance Bill being enacted by September 30th every financial year, on July 5, 2018, a motion under the title “Approval of Provisional Taxation Measures for the financial year 2018/2019’ was moved in the National Assembly under the committee of ways and means.
The National Assembly has the power to mobilize national revenue through the imposition of taxes and borrowing.
To actualize this, the motion sought the House’s approval in the provisional collection of taxes relating to Income Tax, Value Added Tax (VAT), Excise Duty, and Miscellaneous Fees and Levies Act.
But the court established that most of the changes to the taxation regime contained in the Finance Bill 2018, which it said were mere proposals and subject to approval or rejection by Parliament, took effect soon thereafter.
Justice Okwany went on to order that by presenting the Finance Bill 2018 to the National Assembly on June 14, 2018, while the financial calendar ends on June 30, 2018, the Cabinet Secretary for National Treasury violated the Public Finance Management (PFM) Act 2012.
Section 37 of the PFM Act sets April 30th as the deadline for the Cabinet Secretary to table the budget estimates and any other Bills required to implement the national government budget for approval by the National Assembly.
The judge went on to order that the Finance Bill 2018, “or any parts or provisions thereof, including on taxation”, cannot be implemented before the Bill becomes the Finance Act.
This after it has gone through the “parliamentary legislative process laid out in the constitution for approval and adoption by Parliament, and assent by the President.”
