Kenya's top court suspends judgment nullifying 2023 finance law

By Hereward Holland

NAIROBI (Reuters) -Kenya's top court on Tuesday suspended a lower court's ruling that the 2023 finance law was unconstitutional, saying it was important to preserve stability in the budget until the merits of the government's appeal are heard next month.

The finance bills, presented to parliament at the start of every financial year, are the main vehicle for the government to set out its revenue-raising measures including tax hikes.

The Court of Appeal's judgment late last month that last year's Finance Act was unconstitutional was a blow to the government of President William Ruto, who withdrew this year's finance bill in June in the face of youth-led protests, the biggest challenge of his two-year presidency.

Ruto has been caught between the competing demands of Kenya's hard-pressed citizens and of lenders such as the International Monetary Fund.

He has argued that tax increases are necessary to help fund development programmes and pay off a heavy public debt load.

"We find that public interest tilts in favour of granting conservatory and stay orders to ... maintain stability in the budget and appropriation process pending the determination of this appeal," Kenya's Supreme Court said in its ruling.

The Supreme Court will hold hearings on Sept. 10 and 11 on whether the 2023 law is constitutional.

The government, which has been relying on the 2023 finance law to continue collecting taxes after Ruto withdrew this year's bill, did not immediately comment.

The 2023 version was challenged in court following a round of violent street protests last year led by opposition parties.

Ruto's government used the 2023 law to double the value-added tax on fuel, introduce a housing tax and raise the top personal income tax rate.

(Reporting by Hereward Holland; Editing by Alexander Winning and Conor Humphries)