Housing levy will hurt overburdened taxpayer, employers’ lobby says
President William Ruto addresses a gathering in Ol Kalau, Nyandarua County during the launch of the affordable housing project on January 11, 2024.
What you need to know:
- Employers want households with children, women with children, vulnerable persons, indigent persons, and first-time beneficiaries to be prioritised.
- Most of the stakeholders who appeared before the committee also called on the government to ensure sustainability of the project.
The Federation of Kenya Employers (FKE) has poked holes into President William Ruto’s affordable housing programme, warning that it risks hurting the already overburdened taxpayer.
The employers’ lobby, in its memorandum on the Affordable Housing Bill, 2023 presented on Tuesday to the National Assembly committee on Housing, termed the 1.5 per cent deduction from employees’ salaries towards the programme an extra burden for workers.
“The Federation of Kenya Employers notes that the government’s quest to provide affordable housing has all along been there. It should be effected without adding extra burdens to employers who are over-stretched. It can be done without levying more financial commitments from the employers,” reads the memorandum.
FKE said the ongoing public participation on the Bill should be meaningful and help parties come up with win-win solutions to the issues they face. It said employers’ views on the Bill should be taken seriously.
“Engagements for the sake of ticking the box is an issue employers do not support, noting the critical role employers are expected to play in the implementation of the Bill and the regulations therein. The employers’ concerns need to be considered so that there is goodwill from all the key actors in the Bill,” said FKE Chief Executive Officer Jacqueline Mugo in the memorandum.
Among its proposals presented before the committee on Tuesday, the federation wants a new section 5 (c) introduced in the Bill to cap the total amount remitted to Sh5,000.
It argues that capping the amount will ensure affordability and sustainability, and lessen the unintended adverse effect of the levy on employees and businesses.
On the criteria that will be used to allocate the houses, the employers are proposing that the government upholds the one ID one house principle and that only payers of the housing levy and the vulnerable that the government pays for should benefit.
According to FKE, this will ensure as many deserving Kenyans as possible benefit and also encourage non-salaried persons to become more responsible and pay the levy.
In terms of preference in the allocation of the houses, the employers want households with children, women with children, vulnerable persons, indigent persons, and first-time beneficiaries to be prioritised.
At the same time, students from the Technical University of Kenya want at least 30 per cent of all the tenders for the affordable housing project reserved for the youth.
Led by Denis Kirera, the students also said they want the government to come up with different payments for different categories of employees, noting that having a uniform percentage deduction will work against those with low income.
The Jua Kali contractors association called on the government to set aside some of the affordable houses for their members
“We want 10 per cent of those houses assigned to us so that once we have built them, we don’t leave, we just get them allocated to us,” said association chairman Peter Muthaka.
The Kenya Association of Manufacturers asked the government to ensure that all building materials towards for the project are sourced locally and tenders given to local manufactures. Led by Bomet Miriam, they said that local manufacturers have the capacity to deliver whatever is needed for the projects.
Most of the stakeholders who appeared before the committee also called on the government to ensure sustainability of the project and that the youth be engaged in more skilled work rather than just manual work.
The Bill, 2023 which has already undergone First Reading came to the floor of the House last year following a High Court judgment that declared the housing levy imposed only on employees in the formal sector as unconstitutional and unfair.
The public engagements continue until the end of the month.
