President William Ruto lays the foundation stone for the construction of affordable housing units in Buuri, Meru County, on Thursday, January 25.
President William Ruto yesterday reacted with fury following a Court of Appeal ruling that stopped the government from collecting a levy to fund his housing plan, a deduction the High Court had ruled as unconstitutional, but allowed the State to collect the fee pending an appeal.
In different stops in Meru County yesterday, President Ruto was initially defiant—terming the will of the people he had talked to as “the voice of God”, enough to allow him continue with the plan despite the order—but later clarifying that the government intends to appeal the ruling, and regularise the law as had been pointed out by the courts.
“For the avoidance of doubt, I want to tell them that we were in the reprocess of creating a law to guide the process and they should have given us time. We will also appeal the case so that we continue with the programme and create jobs for millions of Kenyan youth,” President said in Kangeta market, Igembe Central.
“I want to tell those who have gone to court that there is no greater public interest than to create jobs for our youth who have graduated from our institutions, yet they don’t have income. They should know that we’re on a mission to create equity in our country and they will not stop us…this is the first government that has a clear demonstrable plan on how to create employment,” the Head of State said.
The Federation of Kenya Employers (FKE) yesterday asked its members to stop deducting the Levy, until and unless yesterday’s orders of the Court of Appeal are vacated in the main hearing, or by a higher court.
“FKE advises our members not to deduct the levy unless the Court of Appeal rules otherwise after the hearing of the appeal or in the alternative, should the government challenge the said ruling in the Supreme Court, and the said court reverses the ruling delivered today,” FKE boss Jacqueline Mugo said in a statement.
At the same time, the National Trade Union Congress and the Kenya Medical Practitioners Pharmacists and Dentist Union (KMPDU) have demanded the immediate refunding of the amount deducted for the last seven months under the housing levy to the workers.
The unionists have also cautioned any employer from deducting the Housing Levy from their employees, saying they will bear individual responsibility.
Speaking during a press briefing at the KMPDU headquarters in Nairobi, the union’s Secretary General- Davji Attelah commended the court for hearing their plea to have the housing levy declared unconstitutional and its deduction from Kenyan workers to be halted.
“We demand the courts to be respected by the employers just like the employees do. Any employer, persons or entity who deducts this from the workers’ salary will bear individual responsibility and the unions shall also use their only weapon that employers understand,” said Dr Attelah.
Failure to adhere to this demand will result in the workers withdrawing their services and acting in contempt to their employers, Dr Attelah. said.
“The Court of Appeal has given a resounding ruling against implementing the housing levy. The ruling brings relief to workers already burdened by hardship. The need for housing in Kenya is not denied but the current approach serves as extortion scheme to siphon hard-earned money from workers,” he said.
On his part, Constantine Wesonga, Secretary General, University Academic Staff Union (Uasu) told all lecturers to check their payslips and should they see the housing levy deduction, then they should go on strike immediately.
“All public employees who are affiliates of International Trade Union Confederation, if you see this deduction, go out and we shall lead you in strike and paralyse services in public sector. The courts have spoken. The law is on our side. We are not going to entertain an illegality,” he said.
He further asked the employers who had already made deductions on the employees’ payrolls to immediately reverse the transaction.
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On behalf of the Union of Civil Servants, Confat Ademba- the acting first deputy secretary-general called on the government to follow the law and ensure all the refunds have hit the workers’ accounts as soon as possible.
In Meru, Dr Ruto said the court should have given his administration time to create a law to actualise the levy.
His utterances come hot on the heels of a meeting with Chief Justice Martha Koome and National Assembly Speaker Moses Wetang’ula, where the three arms of government vowed to work in harmony.
“We want to build housing units and create jobs for the youth according to the Kenya Kwanza manifesto. In the housing programme we can create over 500,000 jobs this year and this is a priority for my government,” Dr Ruto said.
Attorney General Justin Muturi and Treasury Cabinet Secretary Njuguna Ndung’u had argued that thousands of jobs created through the affordable housing programme would be lost and the government risked being sued for breaching contracts it had already signed with contractors.
Further, Mr Muturi argued that the government would not be able to recover the uncollected taxes, in case its appeal is successful.
Housing Principal Secretary Charles Hinga.
Justices Lydia Achode, John Mativo and Mwaniki Gachoka said the submission was wrong as the taxes can be backdated and collected.
The court heard that the contracts already entered into by the government on the basis of the Finance Act, 2023 are binding and if there is a breach, the government will be required to pay damages.
The judges, however, said not even a single contract was placed before them to support the claims by Mr Muturi.
“In absence of evidence to support such a grave assertion, the argument that the appeals will be rendered nugatory on this ground fails,” ruled the judges.
The decision is a welcome relief for more than 3.2 million Kenyans in formal employment, who were contributing 1.5 percent of their salary, matched by a similar percentage by the employer.
A three-judge bench of the High Court on November 28, found that the levy was illegal as it subjects Kenyans in the formal employment to the tax leaving out more than 15.9 million others in the informal sector from contributing to the fund.
All employees, whether on permanent and pensionable terms or contract-based engagements- started contributing to the Affordable Housing Fund in July 2023, when the Act came into force.
Legal framework
The High Court had ruled that the introduction of the Housing Levy through amendment of the Employment Act lacked a comprehensive legal framework and was in violation of the constitution.
Justices David Majanja, Christine Meoli and Lawrence Mugambi further said the imposition of the housing levy against persons in formal employment to the exclusion of other non-formal income earners, was unfair, discriminatory and irrational.
The Court of Appeal noted that the Housing Levy was introduced without a legal framework and it was discriminatory for targeting a section of Kenyans.
“In our view, public interest lies in awaiting the determination of the appeal,” the judges said.
The judges said should the bench hearing the appeal upheld the decision nullifying the levy, then all actions that will have been undertaken under the challenged sections of the law during the “intervening period will be legally frail”.
“Public interest in our view tilts in favour of not granting the stay or the suspension sought. Public interest tilts in favour awaiting the determination of the issues raised in the intended appeals,” the judges said.
Lifeline
The National Assembly through Tharaka MP George Murugara had also submitted that Sections 88 and 89 of the Finance Act, 2023, which was nullified, affected over 1,000 statutory instruments in that it granted them a one-year lifeline.
He further said all the statutory instruments touch on the three arms of the government and some of them relate to collection of revenue from tribunals.
The MP argued that if the instruments are not kept alive, the affected institutions risk dissolution to the detriment of the public.
In addition he said, it would be impossible to reconstitute those bodies because new statutory instruments will have to be enacted.
The judges said they reject the argument that over 1,000 statutory instruments would lapse as, nothing stops Parliament from re-enacting them.
- Additional report by Steve Otieno
