By Lauryne Akoth
The Attorney General, Justin Muturi cautioned the Kenya Revenue Authority (KRA) against deducting the controversial housing levy citing it as unconstitutional.
In a letter dated 21st February 2024 to the KRA Commissioner General Humphrey Wattanga, the AG stated the lack of a legal basis for the implementation of the deductions.
“The upshot of this is that there is no legal basis on which the Housing Levy, provided in section 84 of the Finance Act, can be implemented. As of 26th January 2024, there is no legal provision that enables collection and administration of the housing levy,” the letter read in part.
Muturi’s letter was in response to Wattanga’s letter dated 12th February 2024, seeking guidance on the government’s position on the collection of the housing levy. The AG also referenced the ruling delivered by the court of appeal on the 25th of January that upheld a high court decision to declare the housing levy as unconstitutional.
The housing levy faced opposition from various petitioners who contended that its inclusion of the informal sector and the deductions raised concerns about the justification for imposing the levy solely on the employed. Last week, the National Assembly passed the bill, incorporating the deduction of the levy from the informal sector.
The Affordable Housing Bill, 2023, approved by the National Assembly on 21st February 2024 mandated all Kenyan citizens, whether salaried or non-salaried, to allocate 1.5% of their income to the Affordable Housing Fund.
The bill was passed with a total of 49 amendments comprising entities that will be mandated to implement the housing project, which will include the County Government, the National Housing Corporation, the State Department of Housing, and the Private Sector.
Despite being viewed as a significant measure to rectify court-identified errors and the subsequent suspension of the housing levy due to discrimination concerns, some leaders from the opposition remained determined to contest the proposal legally.
The opposition cited the lack of a clear mechanism to measure the gross income of non-salaried Kenyans, while also claiming that Parliament is being used to hurriedly pass Bills that serve its interests. The majority of the MPs from the opposition stormed out of the National Assembly.
The affordable housing bill is expected to be tabled before the Senate for the first reading. The letter from the Attorney General to the Commissioner General of KRA raises questions about whether the levy was deducted from Kenyans in February and if there are plans for the reimbursement of unconstitutional deductions.