The High Court yesterday suspended the state's plan to deduct 1.5 per cent of workers' pay to finance the proposed National Housing Development Fund.
The NHDF is proposed in the 2018-2019 budget tax proposals.
Justice Hellen Wasilwa issued interim orders suspending the implementation of the taxation proposed in the Finance Act of 2018.
Cotu had sought orders to restrain the state from the deduction of the levy on the salaries, wages or earnings of the employees.
The umbrella body of trade unions says the implementation of the proposed levy negates on the constitutional rights, of the workers particularly and the labour relations laws.
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The union says the deductions may have far-reaching implications not only to the right of fair remuneration and guaranteed workers labour rights but also to Kenyan employees and employers in the exercise of their rights.
"Over-taxation should not be the fall back whenever the government is unable to meet its budget targets. The government must resort to prudent financial management in line with the constitution and stop the theft of public money and properties to plug gaps in the national budget," Cotu Secretary general Francis Atwoli stated in the supporting affidavit.
"General logic informing the 1.5 per cent housing development levy which imposes the more taxes on populations to meet the budget targets including bridging budget deficits is without the consideration for the real causes of the said shortfalls including the lack of prudential financial management and taming the widespread theft of public money."
Cotu, in the suit filed by lawyer Okweh Achiando, said the regulations have not been developed to guide the implementation of the levy.
"It is also worth noting that there was no public participation in the amendment which was brought through the omnibus Finance Act 2018. The government is now prohibited from implementing, advertising or gazetting the rules and regulations over the matter pending the hearing and determination of the application," the suit papers read in part.
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The union said public participation ought to be a real and not an illusory and ought not to be treated as a mere formality for purposes of fulfillment of constitutional dictates.
Atwoli said Cotu is opposed to the proposed levies because they don't promote good governance, accountability and transparency adding the state must live within its means.
He said the introduction of such levies require serious public debate to enable stakeholders to understand the meaning and implications of the provisions to be amended adding that introducing another tax to fund President Uhuru Kenyatta’s agenda will strain both employers and employees.
Atwoli said workers are aggrieved that it is unconstitutional and legally invalid to subject Kenyans to double taxation by imposing the housing development levy on their basic salaries. He said the levy will result in the general rise of other commodity prices.
"The government must allocate money on a need basis. The petitioner is aware of scandals in NYS, Kenya Pipeline Company, NHI, NCPB among many other state corporations and institutions," Atwoli stated.
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