Home Politics Kenya’s High Court has declared the 1.5% housing levy, introduced as part...

Kenya’s High Court has declared the 1.5% housing levy, introduced as part of the Finance Act 2023, unconstitutional.

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Kenya’s High Court has declared the 1.5% housing levy, introduced as part of the Finance Act 2023, unconstitutional.

The court found that the levy lacks a comprehensive legal framework, is irrational, and violates the principles of taxation. The projected collections for the levy were estimated to be Kes 63.2 billion in 2023/24, Kes 70.0 billion in 2024/25, and Kes 78.0 billion in 2025/26.

The court has barred the government from collecting the levy. This decision follows a ruling by a three-judge bench, which found that the Finance Act 2023 amendment to the Employment Act, introducing the Housing Levy, is discriminatory and unfair, creating unequal and inequitable principles.

The court’s decision marks a significant development in the ongoing legal debate surrounding the Housing Levy in Kenya.

The housing levy was introduced by the Finance Act 2023, which amended the Employment Act to require employers and employees to contribute 1.5% each of the gross monthly salary to the National Housing Development Fund.

– The levy was challenged by various petitioners, who argued that it violated the Constitution, the principles of taxation, and the rights of workers.

– On November 28, 2023, a three-judge bench comprising Justices David Majanja, Christine Meoli and Larwrence Mugambi ruled that the housing levy was unconstitutional, null and void.

– The judges found that the levy lacked a comprehensive legal framework and was irrational, discriminatory, and unfair. They also found that the levy was enacted without the concurrence of the Senate and without adequate public participation.

– The judges barred the government from collecting the levy, which was projected to raise billions of shillings for the affordable housing agenda.

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