NAIROBI, Kenya, Apr 17 – The government has been barred from effecting the 1.5 per cent Housing Fund Levy after the Consumer Federation of Kenya (COFEK) filed a suit challenging its legality.
The Employment and Labour Relations Court on Wednesday halted the implementation which was due to start on May 9, 2019 until COFEK’s case set for May 20.
Justice Maureen Onyango suspended the roll-out until hearing of the application challenging execution of the Finance Act 2018 relating to payment of the 1.5 per cent levy by employees and a similar percentage by their employers.
She noted that the court is aware of similar orders still in place whose case is coming up for directions on May 20 and ordered the current application filed by COFEK be placed before Justice Hellen Wasilwa for consolidation.
The Federation of Kenya Employers (FKE) has rejected the plan, saying it’s illegal since they have a court order suspending implementation of the levy until May 20, when their case will be mentioned.
COFEK through its officials on the other hand argues that the levy has not been well thought-out, insisting that its implementation would increase the cost of human resource and create a serious job crisis in the country.
“There is a rising cost of living and poverty which the government must address first.”
“The implementation of the Housing Fund Levy will increase unemployment as many employers will resort to cut down their workforce to detriment of the economy,” COFEK lawyer Henry Kurauka told the court.
The suspension comes amid public outrage at a notice by the Principal Secretary, Housing and Urban Development Charles Hinga requiring employers to deduct 1.5 per cent of an employee’s salary towards the Housing Fund by the 9th of every month and contribute a similar percentage.
FKE Chief Executive Officer Jacqueline Mugo responded Tuesday by disapproving the Gazette Notice terming it unlawful since the matter is still in court and a decision is yet to be made.
“The Federation of Kenya Employers (FKE) were in court on the April 8, 2019 where they obtained an extension of the court orders suspending the implementation of the levy up to the 20th of May 2019 when the case will come up again for mention and further directions,” read FKE’s statement.
Amani National Congress Party Leader Musalia Mudavadi weighed in on the matter Wednesday urging the government to reconsider the mode of financing the programme which forms one of President Uhuru Kenyatta’s Big Four Agenda.
Through his Twitter handle, Mudavadi advised the government to use proceeds recovered from corruption in providing houses for the poor, instead of straining the already burdened taxpayer.
“This is an ill-conceived approach to a noble cause at this point in time. The government should dedicate recovered proceeds from corruption in providing housing for the poor. With the high cost of basic commodities soaring and a biting drought it is foolhardy to load the employee and employer with additional taxation through,” the ANC leader tweeted.
At the same time, the Kenya Union of Post Primary Education Teachers (KUPPET) Deputy Secretary General Moses Nthurima wondered how workers were expected to accept the new tax without any public participation.
“Our claim is premised on solid legal reasoning, including the programme’s violation of key constitutional provisions on fair labour practices and public participation in policy-making, among others. We urge the government to obey court orders and wait for the determination of the issues.”
“The rash with which it wants to force this programme down the throats of workers leaves a lot to be desired about the programme’s alleged benefits,” he added.
Kenyans took to social media platform, where the hashtag #ResistHousingFundLevy was trending, with discussion insinuating that anger from most of Kenyans who think they have been taxed enough.
These contributions were to assist in delivery of President Kenyatta’s pledge of delivering 500,000 houses in the next five years.
Kenya requires more than 250,000 housing units per year to reach the goal that is currently against the average of 50,000 units per year to be delivered by government and private developers.