The proposed housing levy under the Finance Bill, which seeks to deduct 3% from salaried Kenyans which be evened by employers but not to exceed Ksh.5000 has been met with opposition from experts.
The experts state that the timing of the proposed levy by the government is ill-informed given the hard economic times the country is facing.
Analysts await pushback on the new law stating that the initial proposal in 2019 which only sought 1.5% of employee’s salary failed.
The affordable housing project was presented when former President Uhuru Kenyatta introduced the Big 4 agenda which contained the housing project. The proposal sort to have employees contribute 1.5% of their salaries to the housing fund.
However, the Employment and Labour Relations Court in 2018 suspend the levy , after a petition from the workers body. the Central Organization of Trade Unions(COTU).
The court suspended the levy, on grounds that no public participation was undertaken and that its implementation on it was not assured.
Analysts
Analysts are now questioning the government saying the proposed taxes on housing would be hard to follow given that the first implementation failed and also considering the economy that Kenyans are facing.
“The bill seeks to have Kenyans contribute 3% of their salaries but the same government failed to have them contribute 1.5% we see a situation where people will go to court and oppose this,” Financial analyst Churchil Ogutu stated.
In addition to that, the government has also changed the regulations guiding the housing fund, unlike before, the defaulter will not be charged penalties ad also the time limit where one can opt out has been reduced.
“We have seen changes in the bill that seeks to entice contributions including no penalties of failed payments and also the time limit in which one can opt out of the scheme has been reduce,”Ogutu added.
Over 2.4 millions who earn below Ksh.100,000 per more are qualified for a mortgage under the affordable housing scheme, leaving out 77,000 high earning employs who will make the monthly contributions.
“The government will keep going to salaried employees because that’s the only tax they can collect. The majority of Kenyans are in the Juakali sector, but you have to ask yourself how will they be taxed,” PWC’s partner Titus Mukora stated.
Incase one is ineligible for a home under the scheme, a contributor’s levy can be transferred to a pension scheme, to another person under the affordable housing scheme or cash out after exit.
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