NAIROBI, Kenya, Nov 28 — A three-judge bench of the High Court has declared the Housing Levy prescribed under the Finance Act (2023) as unconstitutional for violating key provisions.
Justices David Majanja, Christine Meoli and Lawrence Mugambi argued that by singling out the formal sector without justification, the law failed to conform to the principal of nondiscrimination.
The High Court ruled that the introduction of the levy was discriminatory since it imposed taxes solely targeting salaried Kenyans excluding those in the informal sector.
While delivering the verdict, Justice Majanja pointed out that the levy amendment to lacks a comprehensive legal framework and contravened Article 10, 2 (a) of the Constitution.
“The levy against persons in formal employment to the exclusion of other non-formal income earners without justification is discriminatory, irrational, arbitrary and against the constitution,”Justice Majanja declared on Tuesday.
The court further directed employers to stop deducting the levy from their employees with immediate effect.
“An order is granted prohibiting the respondents from collecting, charging or otherwise charging on Affordable Housing Act on the basis of section 84 of the Finance Act and all prayers on the consolidated petition not specifically granted are dismissed,” Majanja said.
Additionally, the court ruled that, given the public interest nature of litigation, each party would bear its own costs.
Suspended provisions
Parliament passed the Finance Bill 2023 on June 22, 2023. It was later assented by President William Ruto on June 26.
The High Court later suspended the implementation in response to multiple petitions including one filed by Busia senator Okiya Omtatah.
On August 3, the government backdated the mandatory Housing Levy contributions to July 1.
The move followed the lifting of the orders barring implementation of the Act by the Appellate Court on July 29.
A public notice by the Ministry said the levy is payable by the employee and employer at a rate of one point five per cent of the employee’s gross monthly salary by the employee, and one point five per cent of the employee’s monthly gross salary by the employer.
The government had appointed the Kenya Revenue Authority as the collection agent.
