Cotu changes tune on housing levy, but with a condition

Cotu boss Francis Atwoli has hit out at Federation of Kenya Employers (FKE) for opposing the 1.5 per cent housing levy, saying the plan is in good faith.

Mr Atwoli, Secretary-General of the Central Organization of Trade Unions, said the body will support the tax as long as a 15 percent general wage increase by the government is granted.

“The housing fund is a good thing. This is a good deal as you will come out as beneficiaries," he told a shop stewards meeting at Cotu headquarters in Gikomba, Nairobi, on Saturday.

"I told the government that they should give us the 15 percent wage increase in exchange for the implementation of the new levy."

Cotu rejected the new levy in September 2018, terming it unconstitutional and arguing that workers and employers were not consulted.

At the time, Mr Atwoli said, “We have 2.5 million workers in formal employment who are set to contribute to the fund and the government’s target is to build one million houses within the next four years. How long will it take to cater for all workers and what will be the criteria for allocating one a house?”

'SPITE'

Regarding the FKE's position on the tax, Mr Atwoli said Executive Director Jacqueline Mugo registered opposition "just to spite Cotu" after the umbrella workers' union made sure the five percent wage increase promised by the government was gazetted.

“She (Ms Mugo) is now pretending to be fighting for you against the housing levy fund. The case was ours. She is saying the case was in public interest ... I do not represent public interest. I will defeat her as I have always done before," he told the meeting.

On April 4, Ms Mugo announced that the federation had rejected the deduction and urged employers not to implement the policy as directed by the Housing ministry and the Kenya Revenue Authority.

“The notice by the Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works in conjunction with Kenya Revenue Authority has issued a go-head on the implementation of the Housing Fund Levy with effect from May 9, 2019. This is contrary to court orders which are still in force,” she said in a statement.

FKE attended court on April 8, 2019 and obtained an order suspending the implementation of the levy until May 20, when the case will be mentioned.

The federation has, from the start, been opposed to the directive by the government, terming it illegal.

COURT CASE

The levy was introduced under Finance Bill, 2018, which President Uhuru Kenyatta approved in September last year.

It would see a 1.5 per cent mandatory levy on a worker’s gross salary, with a monthly maximum deduction of Sh2,500 for individuals earning a basic salary of Sh166,000 and above.

The government on Friday suffered a blow in its quest to implement the levy as the High Court rejected the withdrawal of a case opposing it.

The court declined to allow a consent between Cotu and the state after interested parties said they had not been consulted.

In an April 16 letter to the Employment and Labour Relations Court, the Attorney-General asked that the date for the mentioning of the case be brought forward for adoption of a consent already filed in court.

But the parties, including the FKE and the Consumers Federation of Kenya (Cofek), both of which had filed applications to be joined to a case filed by Cotu, asserted that they had not been consulted before the consent was filed.

They disowned the document insisting they had no intentions whatsoever of withdrawing the case.

The consent purports that Cotu, FKE and Cofek had agreed with the Transport ministry on withdrawing the case.

FKE, through lawyer Mugo, said it was willing to take up the case if Cotu wanted to opt out.