Attorney General Justin Muturi has told the Kenya Revenue Authority to stop collecting housing levy from salaried Kenyans saying it lacks legal basis.
In a letter to KRA Commissioner General Humphrey Wattanga, the AG said the Court of Appeal’s January 26 decision declining to stay High Court orders that declared the levy unconstitutional still stands.
“The upshot of this is that there is no legal basis on which the Housing Levy as provided in section 84 of the Finance Act, can be implemented,” Muturi said.
He was responding to a letter from Wattanga dated February 12 seeking guidance on the government’s position on the matter.
The High Court on November 28, 2023, declared the Housing Levy illegal citing various reasons including that it was discriminatory as it secluded workers in the informal sector.
The three-judge bench, however, stayed the execution of the orders until January 10, 2024, pending the filing of an application for conservatory orders to stay the decision and allow the government to continue collecting the levy.
But on January 26, the Appellate court dismissed the application and reaffirmed the High Court’s ruling that the 1.5 per cent Housing Levy which is meant to finance the affordable housing programme is illegal.
“Therefore, our considered opinion is that as of the date of the delivery of the ruling of the Court of Appeal, i.e on January 26, 2024, there is no legal provision that enables the collection and administration of the Housing Levy,” Muturi told Wattanga.
“Kindly be advised.”
The Housing Levy was introduced vide section 84 of the Finance Act, 2023.
Following the court’s decision to declare it unconstitutional, the government introduced a new Housing Levy Bill in Parliament and amended the impugned sections.
The Bill passed the third reading on February 21 amid acrimony from the opposition Azimio side and was subsequently forwarded to the Senate for adoption or rejection.
The Azimio MPs stormed out of the chamber after their amendments were not considered.
Suna East MP and Minority Whip Junet Mohamed accused the government of capturing Parliament to rush and push through the Bill.
"Azimio filed several amendments, some yesterday and some today morning. Unfortunately, it looks like there are some instructions from Kenya Kwanza regime that this bill be passed without amendment," he said in a press address outside Parliament.
Muturi’s ruling now serves as a reprieve to hustlers as the Bill awaits the final fate in the hands of senators.
Should the Senate approve the changes introduced in the National Assembly, the Bill will be sent to President William Ruto for assent effectively allowing the government to resume collection of the Housing Levy.
