With the nod of President William Ruto, the Finance Committee of the National Assembly has made a significant concession on the housing levy but declined to completely remove it.
In the new proposal, the committee has vacated the three per cent monthly deduction and instead settled on 1.5 per cent.
In a major relief to employers, the deduction according to the amended report will now be paid only by employees.
Initially, the deduction was to be matched by employers in what many warned could drive many enterprises out of business.
Sources at the committee chaired by Molo MP Kuria Kimani told the Star that the housing levy will also be deferred to next year owing to the prevailing economic situation in the country.
The six months before roll out will also allow the government to come up with a structure on how the housing levy will be handled.
“We managed to have a middle ground on the housing levy which we agreed should be halved and effected from 2024,” a member of the committee told the Star.
The committee is also recommending that the 15 per cent Value Added Tax on digital content creation be reduced to five per cent.
The committee, which has been collecting public views on the bill ,has also recommended tax waivers on agricultural inputs, vaccines and electric cars.
The team has however recommended retention of the 16 per cent VAT on petroleum products.
The VAT, financial experts have warned, will trigger a spike in the cost of living since Kenya's economy is heavily dependent on petroleum products.
But even with the compromise, the opposition and trade unions insists the bill has many punitive proposals and should be withdrawn in its entirety.
National Assembly Minority Leader Opiyo Wandayi on Monday termed the amendments too little too late.
He said as long as basic products, especially the consumables are not zero rated, the bill will lead to a spike in the cost of living.
He also demanded that the housing levy be made voluntary for only those who show interest in having a house under the proposed programme.
“Too insignificant to make any difference, as long as they still left the VAT on fuel, they still not touched the issue of turnover tax,” Wandayi said on phone.
“Our position remains the same, the whole thing needs to be withdrawn and brought back in a form that addresses all the issues.”
“That housing levy, if it is implemented, must be voluntary.”
ODM secretary general and Senate deputy whip Edwin Sifuna insisted that the bill must be withdrawn and relooked a fresh.
Sifuna said Azimio and its members will do everything humanly possible to ensure the bill flops on the floor of the House.
“We want the bill withdrawn in total and the regime cannot cherry pick which poison to take out of the bill and which one to leave,” Sifuna told the Star.
Workers' unions also joined in rubbishing the concessions and urging Parliament to reject the bill.
Kenya National Union of Nurses General secretary Seth Panyako termed the amendments insufficient, saying with employers exempted, its now worse as it will take an employee decades to qualify for a house.
Speaking to the Star from Geneva, Switzerland, the unionist urged parliamentarians to shoot down the bill and save the Kenyan workers.
“From where we sit, the levy should be scrapped altogether. That remains our position. There is enough money in the pension schemes and other private developers to build affordable houses. The government should enter into agreements with these schemes and PPPs. There is no need to tax workers who are already overburdened,” Panyako told the Star.
He added, “Without employers contributing, one will need even 300 years to acquire the houses.”
KNUT deputy general secretary Hesbon Agola concurred, saying the employer is mandated to house the employee and should not be left out.
“If the reduction was to be done then I think it ought to have been done across the board, both employees and employers,” Agola said on phone.
“It is the duty of the employer to house the employee, it is there in law. It is not fair to say that employees give 1.5 per cent and the employer does not subsidise. It could have been fair if both contribute.”
Kenya Union of Journalists general secretary Eric Oduor termed the new proposals outrageous and threatened the unions will take the battle to the courts if the bill is passed.
“The amended proposal is not acceptable. Saving is not a priority; nobody should be forced to save. We have consulted our members and right now they have told us that saving is not their priority,” Oduor told the Star on phone.
The Finance Bill, 2023, stipulates the revenue measures the Kenya Kwanza government wants to implement in the next financial year, starting July 1.
The bill is set for tabling in Parliament on Tuesday with the second reading of the bill on the floor of the House expected on Wednesday after the approval of the House Business Committee.
The Azimio battalion in Parliament is scheduled to mount a serious war against the bill on the floor, a resistance that is likely to splil over to the courts and the streets should Kenya Kwanza flex its numbers and pass it.
