The High Court has dismissed a petition by manufacturers to quash new taxes imposed by the government on raw materials used in the production of paints.
Justice James Makau ruled that levying of tax cannot be said to be a breach of the right to property as argued by the manufacturers.
The petitioners included Basco Products (K) Limited, Crown Paints (K) Limited #ticker:CRWN , Nasib Industrial Products Limited, Maroo Polymers Limited, Galaxy Paints and Coatings Limited, and Super Manufacturers Limited.
"It is imperative to take notice that citizenry, in order to enjoy all the rights under the Constitution, surrenders a part of their property as taxes and duty and the said surrender cannot be said to be unconstitutional," said the judge.
He said taxes are a form of raising revenue sanctioned by the Constitution and the imposition of taxes does not deprive the paint manufacturers of the right to property provided under Article 40 of the Constitution.
As such the petitioner’s allegations that they have been deprived of their property by paying taxes has no basis in law, he ruled. The manufacturers were opposed to the 10 percent excise duty rate introduced last year in the Finance Act 2021 as the government mobilized tax revenues to finance the 2021/22 budget of Sh3.6 trillion.
The raw materials affected by the excise duty include unsaturated polyester, alkyd, Emulsion VAM, Emulsion-styrene acrylic, Homopolymers, and Emulsion B.A.M.
In their petition, the manufacturers described the tax measures as unlawful, unconstitutional, null and void as they impose an unfair tax burden on them and their customers. Their main contention was that the amendments were not subjected to public participation.
The manufacturers had sued the National Assembly, Kenya Revenue Authority, Attorney General, and the Cabinet Secretary for National Treasury & Planning, respectively, while the Kenya Association of Manufacturers was listed as an interested party.
The firms also contended that the excise duty is a consumption tax that should be borne by the final consumer of the supply. Effectively, the 10 percent excise duty introduced vide the amendments of the Excise Duty Act will have to be passed to the customers.
But Justice Makau ruled that from the evidence adduced in court other than general assertions, no unfair tax burden, as understood in law was disclosed by the manufacturers.
He said the amendments of the Excise Duty Act Act are Constitutional and in accordance with the provisions of the law.