alexa Shelve new housing levy and lobby Kenyans to embrace it - Daily Nation

Shelve new housing levy and lobby Kenyans to embrace it

Saturday April 20 2019

With the advent of the money-lending apps, many Kenyans have found themselves in a vicious cycle of debt. The need to beat the repayment period in time for a more positive credit rating leads them to borrow from yet another app and the cycle continues.

The government seems to operate in the same manner. In the Finance Bill of 2018, officials introduced value added tax (VAT) on petroleum products at 8 percent. There was an uproar because Kenyans are already heavily taxed, but the government had its way.

Early this week, the government once again gave guidelines on how the housing levy fund would be collected. Yet again, this is another chip on the take-home pay of the ordinary Kenyan.

The deductions on the itemised payslip of a Kenyan worker will contain, inter alia, PAYE, NHIF and NSSF deductions. Further, the worker will suffer more taxation while purchasing VAT-able goods. Therefore, introducing a housing levy fund at 1.5 percent of their basic pay will be an extra burden on the workers.

The issue of housing will need a lot of stakeholder engagement before a tax can be introduced for affordable housing. It does not escape us that the government is targeting three million salaried employees to provide funds for a country with a surging population of over 45 million people. Ironically, the salaried employees are more likely to already own homes.

The idea also that you will get a home upon retiring beats the whole notion of personal improvement and waters down the aspiration of the Kenyan people.

One of the major principles of taxation is that of adequacy. That the tax should be adequate enough to provide the intended purpose. With runaway corruption, the cost of enforcement and the intended bearers of this tax, I doubt the government will be able to collect enough funds from the housing levy to provide enough houses. The government proposes to hold a lottery to determine who gets the houses first. The government is basically gambling with a basic need.

With an ever increasing population and lack of employment, the idea of housing for every Kenyan will be an uphill task for any government. Already, the government is unable to do away with slums that dot our urban centres. The government has also failed to house its employees, most prominently police officers.

The idea of providing affordable housing for all is a noble one that will need public participation and public-private partnerships if it is to succeed. The government must be keen not to overburden its people with taxes when they are not getting or experiencing the benefits of the usual tax increases. The housing tax should be shelved for now until we can get a better solution to this problem that has bedevilled us for long.

STEPHEN MARITA, Nairobi