The Housing Tax (Levy) is Now a Huge Mess

13 mins read
Muturi to KRA: No! You can’t continue collecting Housing Levy.

The one thing Kenyans can say about the Ruto regime with absolute accuracy is that Ruto has no clue what he is doing. Ruto has no plan for anything whatsoever that can benefit ordinary Kenyans. It almost embarrassing to have a president like this even if you don’t like William Ruto you at least want a good and responsible government for your country. That is how we live as humans in democratic countries.

In the latest catastrophe for the Ruto regime, Mr. President Ruto’s Lame duck Attorney General Justin Muturi has told the Kenya Revenue Authority to stop collecting housing levy from salaried Kenyans saying it lacks legal basis.

In a letter to KRA Commissioner General Humphrey Wattanga, the AG said the Court of Appeal’s January 26 decision declining to stay High Court orders that declared the levy unconstitutional still stands.

“The upshot of this is that there is no legal basis on which the Housing Levy as provided in section 84 of the Finance Act, can be implemented,” Muturi said.

He was responding to a letter from Wattanga dated February 12 seeking guidance on the government’s position on the matter.

The High Court on November 28, 2023, declared the Housing Levy illegal citing various reasons including that it was discriminatory as it secluded workers in the informal sector.

The three-judge bench, however, stayed the execution of the orders until January 10, 2024, pending the filing of an application for conservatory orders to stay the decision and allow the government to continue collecting the levy.

But on January 26, the Appellate court dismissed the application and reaffirmed the High Court’s ruling that the 1.5 per cent Housing Levy which is meant to finance the affordable housing programme is illegal.

“Therefore, our considered opinion is that as of the date of the delivery of the ruling of the Court of Appeal, i.e on January 26, 2024, there is no legal provision that enables the collection and administration of the Housing Levy,” Muturi told Wattanga.

“Kindly be advised.”

The Housing Levy was introduced vide section 84 of the Finance Act, 2023.

Following the court’s decision to declare it unconstitutional, the government introduced a new Housing Levy Bill in Parliament and amended the impugned sections.

The Bill passed the third reading on February 21 amid acrimony from the opposition Azimio side and was subsequently forwarded to the Senate for adoption or rejection.

The Azimio MPs stormed out of the chamber after their amendments were not considered.

Suna East MP and Minority Whip Junet Mohamed accused the government of capturing Parliament to rush and push through the Bill.

“Azimio filed several amendments, some yesterday and some today morning. Unfortunately, it looks like there are some instructions from Kenya Kwanza regime that this bill be passed without amendment,” he said in a press address outside Parliament.

Muturi’s ruling now serves as a reprieve to hustlers as the Bill awaits the final fate in the hands of senators.

Should the Senate approve the changes introduced in the National Assembly, the Bill will be sent to President William Ruto for assent effectively allowing the government to resume collection of the Housing Levy.

Housing levy will be back on March pay slips – Ichung’wah
“So we hope by 15th of March, your Excellency, you will have assented to the new Affordable Housing Bill.”

Majority leader in the National Assembly Kimani Ichung’wah has assured President William Ruto that the Kenya Kwanza side will use its numerical advantage in the House to pass the new bill on affordable housing.

Ruto’s affordable housing programme came a cropper, at least legally, after the courts twice declared the 1.5 per cent housing levy meant to finance it illegal.

But speaking at the start of a Cabinet retreat in Naivasha on Monday, Ichung’wah assured the President that the Kenya Kwanza side will pull all stops to ensure the a new bill currently before the House passes without hitches.

“Your Excellency I’m happy to report we began debate last week on Thursday, we were not able to conclude and hopefully we should be able to conclude that tomorrow (Tuesday) afternoon,” he said.

The new bill contains amended clauses which the courts said were unconstitutional.

In a decision on November 28 last year, three judges of the High Court ruled that the introduction of the housing levy through amendment of the Employment Act by Section 84 of the Finance Act, 2023 lacks a comprehensive legal framework in violation of Articles 10, 201, 206 and 210 of the Constitution.

Justices David Majanja, Christine Meoli and Lawrence Mugambi also found the imposition of the housing levy unfair, discriminatory and irrational saying informal income earners are excluded in supporting the national housing policy.

The judges also said the law ought to have been subjected to public participation prior to its implementation.

The government appealed the decision and sought orders to stay the verdict and continue collecting the 1.5 per cent levy but the appellate court threw out the application on January 26, 2024.

A three-judge bench held that it wouldn’t be in public interest to grant the order sought by the government to allow a statute that has been found to be constitutionally illegal to continue being in the law books pending the hearing of an appeal.

“This is because should the Court hearing the appeal affirm the constitutional invalidity of the impugned laws, then all actions that will have been undertaken under the impugned sections of the law during the intervening period will be legally frail,” Justices Lydia Achode, John Mativo and Mwaniki Gachoka said.

Undettered, President Ruto insisted that the affordable housing plan would continue and asked the court to give the government time to conclude creation of a new law to actualise the housing levy.

“For the avoidance of doubt, I want to tell them that we were in the reprocess of creating a law to guide the process and they should have given us time,” Ruto, who spoke in Meru on Friday, January 26, said.

On Monday, Ichung’wah assured the President that the plan to enact a new law was on course and the 1.5 per cent housing levy will be back before the March payrolls are finalized.

“We should be able to conclude that business tomorrow (Tuesday), hopefully on Wednesday afternoon we get into third reading…and be able to process the bill forward to the Senate so that they are able to advertise it by Friday, do the public participate and be able to get a new Affordable Housing Bill before the next payroll,” he said.

The Majority leader rallied Kenya Kwanza MPs attending the Cabinet retreat not to fail in showing up in the House to pass what he termed as critical government business.

He said debate was last Thursday afternoon cut short because the Majority side failed to show up in their numbers.

Now here is the real nightmare for the Ruto government. Now they have two House Tax legislations and the one they passed in the Finance Act 2023 has been challenged in court as unconstitutional. That case is now before the Court of Appeal.

After Ruto realized he had lost his Housing Levy Tax ( In 2023Finance Act) they are now fighting in two fronts if not more.

The Ruto government through the KRA are still illegally deducting Kenyan workers pay for a Housing Levy that has been stopped by courts. How can you do that. What kind of government does that kind of thing.

Two illegal House Levies in one year in office and both are in the courts. How lovely for Kenyans.

Today even Ruto’s AG Muturi told his government it is illegal to do that. So if they stop it tomorrow what happens? Return all the money you have deducted illegally to the Kenyans you deducted that money from. That is the next line of action.

And then Ruto has another fantasy Housing creepy scene where they have cooked up a new legislation for Housing Levy and that is the one Kimani Ichung’wah is promising Ruto will be passed into law in few days and will be law soon.

Talk about Dumb and Dumber. Ruto please, the first Housing Levy you passed is illegal and dead and you are still fighting in Court of Appeal for it to be legal.

Now, Mr. President, you are going to have a new Housing Levy Act passed by your hapless MPs and then you sign it. Which of your two Housing Levy legislations should Kenyans even deal with? None. And Mr. President you know that. Do you care? Why not?

Is Ruto going to confess that the 2023 Housing Levy is illegal and dead and then withdraw his government appeal against the case.? If so Mr. President have another confession about this new fake Housing Levy legislation in 2024 because it is going to court too as Ruto already knows.

So if the new Ruto Housing Levy is passed and signed by March 15, 2024 that means the old legislation is dead and all money deducted under that plan has to be refunded.

The new Ruto Housing Levy will go to court for another 3 years. That will be a very great achievement for Ruto and for Kenyans trying to build their own homes to live in. They will have nothing at all from the Ruto regime. Keep it going Ruto if it makes sense to you because it makes no sense to Kenyans at all.

This is the law in Kenya on this matter as of right now.

Adongo Ogony is a Human Rights Activist and a Writer who lives in Toronto, Canada

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