Court Declares Proposed Robin Hood Taxes Illegal

The High Court declared that Treasury CS Henry Rotich did not follow the Constitution when he presented the Finance Bill 2018.

Notably, the tax imposed on mobile money transfer, imported vehicles, and bottled water was termed as unconstitutional.

On Wednesday, Justice Wilfrida Okwany ruled: "The provisional collection of Taxes and Duties Act 415 and the provisional collection of taxes and duties 2018 fail the constitutional test of validity.”

Justice Wilfrida Okwany maintained that the Finance Bill 2018 could not be implemented before it became the Finance Act.

She further stated that the Bill should have gone through the Parliamentary legislative process laid out in the constitution.

The two issues of concern raised were whether it was procedural for the Treasury to start collecting the taxes proposed in the Finance Bill 2018 before enactment.

Earlier on, the government had declared that it will impose a tax on airtime offered by employers to Kenyans.

The tax will also apply to allowances offered to employees such as housing, meals and cars.

Notably, the government had planned to also take up 12.7% of every mobile money transfer transaction, a move that would have affected ordinary Kenyans who are the major users of the service.

On cars, an employer was to be taxed according to the engine size of the vehicle as long as the vehicle was used for company business. Personal use vehicles would not have been taxed.

Robin Hood taxes are revenues aiming to redistribute resources in order to achieve greater social equality, especially a proposed tax on transactions made by financial institutions.