alexa Parties return to court as battle to save housing levy resumes - Daily Nation

Parties return to court as battle to save housing levy resumes

Sunday May 19 2019

A housing estate: KRA is from July 1 expected to start collecting the tax on rental income earned in 2014  onwards. PHOTO | FILE

A housing estate. Transport, Housing and Infrastructure Cabinet Secretary James Macharia said on January 29, 2019 that the housing levy deductions are set to take effect after deal reached with workers' union and employers. PHOTO | FILE | NATION MEDIA GROUP 

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The fate of one of President Uhuru Kenyatta’s legacy projects, the provision of affordable housing, will be litigated at the Employment and Labour Relations court Monday.

At stake is whether the government should go ahead to deduct 1.5 per cent from the gross salary of employees in the formal sector towards a housing levy fund.


Through the fund, the government hopes to collect more than Sh57 billion annually to build an ambitious 500,000 housing units within the President’s second term, which is almost halfway through.

Gatundu South MP Moses Kuria has said President Kenyatta would have to deliver more than 250 houses every day for the remainder of his term, an equivalent of an economic and engineering miracle.

The proposal has run into headwinds of strong opposition by employees, employers and civil society groups who argue that government has no business constructing houses for the public.


Part of the problem is the government’s failure to win the trust of a public that is ever wary of surrendering their hard-earned cash to the government, fearing that it might be lost to corruption.

The result of this open public opposition to the housing project has been multiple cases that have been filed against the government from effecting the housing levy deductions, which was to begin last month.

Last month, Attorney General Kihara Kariuki requested that the hearing of the case be brought forward, with plans of adopting a consent signed between the government and Central Organisations of Trade Unions (Cotu).

But when they appeared before Justice Maureen Onyango, Federation of Kenya Employers (FKE) denounced the agreement, saying they were not part of the negotiations. FKE also told the court that they were ambushed on the mention of the case.

Cotu, on its part, through lawyer Okweh Ochiando, said they had no problem with the consent because the government had addressed their concerns.


Justice Onyango then adjourned the case to May 20 but urged parties to negotiate with a view to getting the way forward.

On Monday, the court will also consider merging the case together with another filed by Consumers Federation of Kenya (Cofek) and another by Trade Unions Congress (TUC).

In December, Cotu obtained orders stopping the government from deducting the amount from workers’ wages, after challenging the constitutionality of section 31 (a) of the Employment Act, which calls for the deductions towards the Housing Fund.

But the union later agreed to withdraw the matter, saying its concerns had been addressed. The move angered FKE, which had been enjoined in the case and sought to proceed even with Cotu’s intended withdrawal.

FKE had also obtained a court order barring the government from establishing an advisory board to run and manage the Housing Fund. The federation accused the ministry of Infrastructure, Housing and Urban Development of unilaterally calling for nominees to the advisory board, without public consultation.

FKE executive director Jacqueline Mugo said the move contravenes the provisions of section 6 of the Housing Act, which provides that the Housing Fund is under the control of the National Housing Corporation. She further said it was fair that the constitutionality of the Housing Fund be determined first.

Last month, Transport and Infrastructure CS James Macharia notified employers and employees that the provision of the Finance Act, 2018 relating to section 31A of the Employment Act would come into force starting May, 2019.


The notice said employers would pay 1.5 per cent while they would deduct a similar percentage from employees towards the housing levy.

The notice gave Kenya Revenue Authority powers to collect the amount in successive months together with other statutory deductions. It provided that those not salaried would make a voluntary contribution of Sh200 per month towards the Levy.

But Cofek through lawyer Henry Kurauka also challenged the Housing Fund Levy, saying it is unfair, oppressive and discriminatory to many citizens such as those who own houses, retiring or are about to retire, people living with disabilities, senior citizens and low-income earners.

Cofek argued that the decision by the government to implement section 31A of Employment Act is illegal, unconstitutional and irrational because the notice was too short and insufficient.

The lawyer said the housing levy is not a priority to Kenyans, arguing that there are more pressing issues such as the drought and hunger ravaging parts of the country, health challenges and unmet expectations on the National Hospital Insurance Fund, the rising cost of living and poverty.

“The housing fund levy does not guarantee all contributors  will get houses,” he said. The lawyer said the scheme does not factor that some employees enjoy housing allowances and are members of home ownership schemes.