Kenya’s President, William Ruto, has formally endorsed a contentious bill, enacting legislation that enables the government to sustain the collection of a housing levy amounting to 1.5% of an individual’s monthly earnings.
The primary objective of this levy is to facilitate the financing of affordable housing projects targeted at low-income demographics. Nevertheless, its implementation has elicited considerable disapproval.
Opposition factions and a substantial segment of the populace have voiced discontent regarding the levy, deeming it an additional financial encumbrance amidst a proliferation of new taxation measures.
Previously impeded by legal challenges, the bill encountered delays in its enactment, with a judicial intervention suspending deductions owing to inadequacies in the legal framework. Despite dissent voiced by opposition legislators, the bill underwent amendments and received ratification by Members of Parliament during the preceding week.
Originally articulated within President Ruto’s 2022 electoral platform, this levy constitutes a component of a broader fiscal legislation passed last June, which encompassed a twofold escalation of fuel sales tax. Additionally, an augmented health insurance levy is poised for imminent introduction.
The governmental stance asserts that augmenting tax revenues is imperative for mitigating the budget deficit and financing indispensable public amenities.
Commencing deductions of the 1.5% housing levy from salaries commenced in July of the prior year. However, amidst public outcry, an activist pursued legal recourse against the government, contending successfully that it unfairly targeted Kenyans within the formal sector who receive regular monthly remuneration.
In response to the concerns delineated by the judiciary, the newly enacted legislation extends the levy’s purview to encompass other categories of workers, now mandating non-salaried Kenyan individuals within the informal sector to fulfill levy obligations.
Furthermore, the newly enacted legislation establishes the Affordable Housing Fund, tasked with the administration of funds accruing from the levy.
Authorities affirm that deductions will not retroactively encompass sums that would have been remitted had the scheme not been suspended.
President Ruto aims to oversee the construction of 200,000 affordable housing units annually, concurrently aspiring to generate over 600,000 employment opportunities.
