Parliament on Thursday evening commenced debate on a Bill that seeks to entrench the controversial housing levy in law in a bid to comply with the orders of the courts.
Majority Leader Kimani Ichung’wah initiated debate on the Affordable Housing Bill 2023, nearly three months after the High Court declared the levy charged at 1.5 percent of the gross salary of an employee unconstitutional.
A three-judge Bench last November declared the housing levy unconstitutional for being discriminatory and creating unequal principles, dealing a blow to President William Ruto’s pet programme.
The judges said the government had failed to explain the imposition of the levy or a legal framework to anchor the tax, contrary to the constitutional provisions.
“I want to thank the courts which have made it possible to collect more money. We will now raise more money because the Bill now captures every person who earns an income,” Mr Ichung’wah said.
“From the annual target of Sh63 billion, we will collect more money to construct houses across the 47 counties.”
The Bill provides a legal framework for the establishment of the Affordable Housing Fund, access to affordable housing and in particular, gives effect to Article 43 of the Constitution on the right to accessible and adequate housing.
Mr Ichung’wah said the housing levy should not only be levied on salaried persons since the committee has proposed changes that will see the gross income of persons in the informal sector subjected to the housing levy.
“This Bill gives us that opportunity not just to provide affordable housing but an opportunity to create millions of jobs from engineering, architecture, accountants, land and quantity surveys, drivers of earthmovers,” he said.
Minority Leader Opiyo Wandayi criticised the Bill saying it will not only lead to over taxation but also does not guarantee contributors a house.
"The drafters of this Bill have come out clearly that contribution is not a guarantee that one will get a house, no matter how much one has been contributing towards the affordable houses," Mr Wandayi said.
Mr Wandayi said the Azimio coalition had the same vision of affordable houses but was to generate the money for building from other taxes and not taking a share from Kenyans income.
The joint committee on Finance and National Planning and that of Housing conducted extensive public participation on the Bill.
Emurua Dikir MP Johana Ngeno who chairs the Housing committee said the committee toured several counties where Kenyans expressed the need for housing.
“We undertook to listen to the people of this republic. Our findings were that they wanted to know how they can access the houses without being disadvantaged,” Mr Ngeno said.
“There was the question of voluntary contributions. We listened to people on how to levy everybody. Courts ruled that collection of levies is not discriminatory.”
He said people wanted houses that are modelled on the manyattas in the Maasai and other pastoralist areas.
“Some wanted the National Social Security Fund model of collection of levies. We need to make an amendment on areas MPs think is necessary to the Bill,” he said.
“There is a proposal for formation of the board to manage the housing levy after collections by the Kenya Revenue Authority.”
Employers match the contributions of their workers, a requirement that has significantly increased operational costs.
Contributions under the Housing Development Levy are expected to soar by 40.8 percent to hit Sh89 billion in the 2026/27 financial year, up from Sh63.2 billion in the current fiscal cycle.
Estimates from the draft Budget Review and Outlook Paper show the contributions will stand at Sh70 billion in the 2024/25 fiscal year and Sh78 billion in the financial year 2025/26.
The government is betting on the collections to finance affordable housing, associated social and physical infrastructure as well as affordable home financing. The Bill says 36 percent of the collections will be for the developing and upgrading of institutional houses approved by the Cabinet.
The National Housing Corporation will take 30 percent of the funds to develop and upgrade affordable houses while a further 30 percent will be used to upgrade slums and maintain the units.
