Housing levy to resume its collection, courts says

Housing levy expected to resume its collection after the Court of Appeal allowed the government to continue with its collection until 26th January 2024 when it will finally rule on the matter.

The three-judge led bench which consisted of Lydia Achode, John Mativo and Mwaniki Gachoka ordered that status quo be maintained until a ruling is made on whether the government can continue collecting the levy pending the determination of an appeal challenging its legality.

“Upon hearing the parties, all the applications are consolidated as they arise from the same judgement of the High Court dated 28th November, 2023. Civil Application No. E577/2023 is designated as the lead file. The ruling on these consolidated applications will be delivered on 26th January, 2024.”

“In the meantime, the status quo obtaining as of today shall be maintained until the delivery of the ruling.”

President William Ruto Wednesday pleaded with the Court of Appeal to allow his government to continue collecting the controversial housing levy, pending the hearing of an appeal challenging its legality.

Through Attorney General Justin Muturi, Dr Ruto said through his affordable housing program, the government has created 120,000 jobs and anticipates to construct 258,874 units annually, which would be thrown into jeopardy.

The High Court last year found the housing levy illegal, stating that it was discriminatory as it targets those in formal employment alone.

A bench of three judges, however, suspended the decision until January 10, to allow the government appeal against the decision.

Wednesday, Mr Muturi told Court of Appeal judges Hannah Okwengu, John Mativo and Mwaniki Gachoka that over the past six months since the housing levy came into effect, there have been milestones achieved including more funds made available for the affordable housing project pipeline.

Mr Muturi said 39,879 units have been launched, with a further 32,420 units earmarked for launching

“Infrastructure projects initiated pursuant to the affordable housing, and in line with the government’s objective to facilitate affordable housing for the public, are presently [sic] underway. In the absence of a stay, the abrupt halt to these projects will lead to irreparable damage, significant impacting the economy,” Mr Muturi said in submissions filed in court.

The affordable housing fund is gross-on-gross taxation on workers’ income where the Kenya Revenue Authority (KRA) uses same gross pay to calculate the Pay As You Earn, a form of double taxation. Every employee contributes 1.5 percent, matched by a similar percentage by the employer.

The sentiments were supported by Treasury CS Njuguna Ndung’u stating that the government has been collecting Sh5 billion monthly with an estimated Sh73 billion annually using the challenged Finance Act.

Kiragu Kimani said although the consequences of barring the government from collecting the taxes are irreversible, Kenyans being deducted can get a refund in case the court finds the levy unconstitutional.

“If the stay order sought herein is not granted, the government would have lost an opportunity to collect revenue required for the implementation of the affordable housing programme. This effect is irreversible,” he said.

The application was opposed by among others, Katiba Institute, Law Society of Kenya, Tribeless Youth as well as Busia Senator Okiya Omtatah and Eliud Matindi.

Read also:https://zungukatv.com/2024/01/04/government-defends-president-on-squabble-with-judiciary-and-lsk/


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