Employers across Kenya have been urged to immediately cease deducting the controversial housing levy from employees’ salaries, following a landmark decision by the Court of Appeal that halted the levy’s collection. This directive from the Federation of Kenya Employers (FKE) signals a potential blow to the government’s ambitious affordable housing project, which relied heavily on the levy for funding.
The Court of Appeal, in a ruling issued earlier this week, declined to extend an order allowing the government to continue collecting the 1.5% levy on salaries exceeding Ksh.4,000. This effectively put a temporary stop to the levy’s operation, casting a shadow of uncertainty over the future of the housing project.
Reacting to the court’s decision, FKE President Jacqueline Mugo issued a strong statement advising employers to stop making levy deductions from their employees’ paychecks.
“In light of the Court of Appeal’s ruling, we advise all employers in Kenya to immediately suspend the deduction of the housing levy from their employees’ salaries,” stated Ms. Mugo. “We urge employers to comply with this legal directive to avoid any potential liabilities or complications.”
The FKE’s stance was welcomed by employee representatives, who have long opposed the levy, citing concerns about its transparency, impact on low-income earners, and lack of clear accountability mechanisms.
“This is a victory for Kenyan workers,” declared Cotu Secretary General Francis Atwoli. “The levy was an unfair burden on millions of Kenyans, and we are happy to see it suspended. We now urge the government to engage in meaningful dialogue with stakeholders to find alternative and sustainable solutions for addressing the housing crisis.”
However, the government expressed disappointment with the Court of Appeal’s decision, emphasizing the crucial role the levy played in funding the affordable housing project. State House spokesperson George Njoroge maintained that the government respects the court’s ruling but is exploring legal and alternative funding options to ensure the project’s continued progress.
“We are studying the court’s decision in detail and exploring all legal avenues to address this setback,” Mr. Njoroge stated. “The government remains committed to delivering affordable housing for Kenyans, and we will not be deterred by temporary challenges.”
The court’s decision and FKE’s subsequent directive have thrown the future of the housing levy and the larger affordable housing project into flux. With employers instructed to halt deductions and the government scrambling for alternative funding sources, it remains unclear how the initiative will move forward.
The coming weeks and months will be crucial in determining the levy’s ultimate fate and the government’s ability to navigate this legal hurdle. While the project’s long-term viability and its impact on Kenya’s housing crisis remain uncertain, one thing is clear: the Court of Appeal’s decision has significantly complicated the government’s path towards achieving its ambitious housing goals.