Kenya's supreme court quashes ruling that voided 2023 finance law

NAIROBI (Reuters) - Kenya's Supreme Court on Tuesday quashed a decision by an appeals court nullifying the 2023 finance law, a victory for the government after protests forced President William Ruto to withdraw this year's finance bill.

The finance bills form the main vehicle for the government to set out revenue-raising measures, and Ruto's administration has been relying on the 2023 finance law to continue collecting taxes after the rollback of this year's legislation.

"We hereby set aside the Court of Appeal's finding declaring the entire Finance Act 2023 unconstitutional," the Supreme Court said in its ruling.

The 2023 law was challenged in court following a round of opposition-led protests last year, after Ruto's government used it to double the value-added tax on fuel, introduce a housing levy and raise the top personal income tax rate, among other measures.

Ruto's government, which took office in September 2022, sought to impose a new round of tax hikes this year, angering many citizens and culminating in deadly protests in June and July in which more than 60 people were killed.

The unrest forced Ruto to withdraw this year's version of the finance law shortly after it was passed by the national assembly, and delayed the approval of a new funding tranche from the International Monetary Fund.

Ruto has argued that the tax increases are necessary to help fund development programmes in Kenya, East Africa's largest economy, and pay off a heavy public debt load.

The IMF's executive board is set to meet to approve the new disbursement on Wednesday after Kenya fulfilled targets mandated by the Fund in a review of its loan programme.

In July, Kenya's Court of Appeal declared the 2023 finance law unconstitutional, but the top court suspended the ruling until it heard an appeal filed by the government.

(Reporting by Humphrey Malalo; writing by Elias Biryabarema; editing by Ammu Kannampilly and Mark Heinrich)