Court rules housing levy unconstitutional, says it discriminates salaried workers

Court rules housing levy unconstitutional, says it discriminates salaried workers

Housing levy unconstitutional, High Court rules in favour of COTU, COFEK, LSK and FKE

A High Court in Nairobi has struck down the housing levy that was introduced by President William Ruto as unconstitutional. The levy was meant to fund the government’s affordable housing agenda, but the court found that it unfairly targeted salaried Kenyans and excluded those working in the informal sector.

The three-judge bench, comprising of Justices Lawrence Mugambi, Christine Meoli and David Majanja, ruled on Tuesday that the levy violated Articles 27 and 201 of the constitution, which guarantee equality and non-discrimination, and stipulate the principles of public finance.

“The levy against persons in formal employment with the exclusion of other non-formal without justification, discriminatory, irrational, arbitrary and in violation of Articles 27, 201 of the constitution,” Justice Majanja said.

The judges also declared that Section 84 of the Finance Act, which introduced the levy, lacked a comprehensive legal framework and violated Article 10 of the constitution, which outlines the national values and principles of governance.

The court further declared that Sections 76 to 78, 87, 88 and 89 of the Finance Act, which amended various provisions of the Roads Board Act, the Unclaimed Assets Act and the Tax Procedures Act, were unconstitutional and void.

However, the court upheld the constitutionality of Sections 30 to 38, 48 and 33 of the Finance Act, which amended the Value Added Tax Act, the Excise Duty Act and the Insurance Act respectively.

The court’s decision was a blow to President Ruto, who had championed the housing levy as part of his Big Four agenda. The levy required employers and employees to each contribute 1.5 per cent of their monthly basic salary to the National Housing Development Fund, subject to a maximum of Sh5,000.

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The levy was challenged by various parties, including the Central Organisation of Trade Unions (COTU), the Consumers Federation of Kenya (COFEK), the Law Society of Kenya (LSK) and the Federation of Kenya Employers (FKE).

Lawyer George Murungara, representing the government, asked the court to grant a stay of the judgment for 45 days as the government considers its options. The court directed the parties to file their submissions on the stay application within 14 days.


Court rules housing levy unconstitutional, says it discriminates salaried workers

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