The controversial Affordable Housing Bill, 2023 has been amended to solicit the 1.5% Housing Levy contributions from individuals in the informal sector.
This is after a three-judge bench declared the levy unconstitutional last week due to its discriminatory nature and unequal principles as it only targeted salaried Kenyans and expanded the tax to include incomes other than monthly salaries.
The Judges also criticized the government for not providing a rational explanation for the imposition of the levy or a legal framework to support it, as required by the Constitution.
This court decision raised the possibility of revoking the levy, which has been collected since July and has faced public backlash due to its impact on business operational costs, where employers are required to match their workers’ contributions, resulting in significant increases in expenses.
In the proposed changes presented by Majority leader Kimani Ichung’wah, employers who fail to remit the Housing Levy deductions will face a penalty of three percent of the unpaid amount every month, if the Bill is approved by Parliament.
Further, the penalty has been increased by one percent from the earlier proposed two percent in the Finance Bill, 2023.
According to the draft Budget Review and Outlook Paper, estimations indicate that the levy contributions will amount to Ksh70 billion in the 2024/25 fiscal year and Ksh78 billion in the 2025/26 financial year.
By Amos Kerich
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