In Kenya, mandatory housing tax faces new court tussle

The Court of Appeal lifted orders from the High Court on 28 July that had barred the implementation of the act until the case filed by opposition senator and activist Okoiti Omtatah is heard and determined.

Omtatah has also filed an appeal at the Supreme Court, in parallel with the lobby groups, to oppose the decision of the Court of Appeal.

We have issued a notice of appeal against Friday's Court of Appeal ruling that lifted conservatory orders barring implementation of the Finance Act 2023. The notice will be filed at the Supreme Court. pic.twitter.com/LNK0PdXnMz

— Okiya Omtatah Okoiti (@OkiyaOmtatah) July 30, 2023

 

The petitioners led by Kenya Human Rights Commission, Transparency International Kenya and others want the Appeals Court ruling blocked.

They argue that if implemented, it poses an immediate risk to lives and livelihoods of ordinary Kenyans.

Greatly affects the poor

“By imposing retrogressive tax measures, that will burden low-income earners,” the group of petitioners said in court documents.

They also warn that Article 43 of the Kenyan constitution, which provides for economic and social rights, will be violated if the new tax measures are not halted by the court.

Suba Churchill, national coordinator of the National Civil Society Congress, tells The Africa Report that ordinary Kenyans are relying on the judiciary to revert the implementation of the legislation on mandatory house tax among others.

“If the courts don’t stand with ordinary Kenyans, immense suffering awaits them,” he says, adding that the court remains their only hope.

A source from a Nairobi-based local NGO, Young Women Growing-Kenya, who requested not to be named for security reasons, however says the courts cannot be trusted on this matter.

“Our courts have been infiltrated. Kenyans are on their own,” the source says, faulting President William Ruto’s administration for targeting low-income earners with new tax measures.

Double taxed

Despite the petition challenging its implementation, the government, through Kenya Revenue Authority (KRA), 

KRA would like to inform members of the Public that with effect from 1st July 2023, all Employers are required to deduct the Affordable Housing Levy from the employee’s gross salary and remit together with the employer’s contribution. pic.twitter.com/84Fb0kpWBy

— Kenya Revenue Authority (@KRACorporate) August 4, 2023

Through a public notice, the revenue authority wants employers to remit a 1.5% contribution alongside a similar rate for their employees that was backdated from the month of July.

This means that salaried Kenyans will be taxed twice at the end of August. “Employers who fail to remit the deductions shall be liable to penalty,” KRA said in its notice.

Hillary Kabae, a new employee, is outraged. After seeking for permanent employment for years, he finally secured a job with a local company in June in the capital Nairobi. At the end of the month, 3% of his pay will go to the government.

“I haven’t even started enjoying my salary, but now I’m forced to pay this government,” he tells The Africa Report.

Despite the criticism and court petitions, Ruto is adamant on the mandatory housing levy, insisting that the funds collected will help the country attain its plan on affordable housing and eradicate informal settlements in urban areas.

“We want to ensure that ordinary Kenyans become homeowners. Our youths will also get jobs,” Ruto says in public gatherings, adding that his government will not borrow to develop the country.

The opposition coalition, Azimio la Umoja, is opposed to the mandatory housing tax, calling it unsustainable. It supports court petitions to have it shelved.

In their list of demands, ahead of the anticipated political talks with the government side, the Raila Odinga led coalition has prioritised introduction of high taxes as thorny issues they want addressed to reduce the high cost of living.