Pain for workers as KRA effects 1.5pc housing levy

Wednesday, April 3rd, 2024 04:01 | By
President Ruto signs the Affordable Housing Bill into law on March 19, at State House, Nairobi. PHOTO/PCS
President Ruto signs the Affordable Housing Bill into law on March 19, at State House, Nairobi. PHOTO/PCS

Workers are reeling in shock after the Kenya Revenue Authority (KRA) started raiding their payslips to deduct the statutory 1.5 per cent housing levy from their March salary after President William Ruto assented to the Affordable Housing Bill.

Civil servants, employees in the private sector and police officers received their March pay slips with deductions having been made.

Teachers were, however, spared as their employer had deducted the tax from their February salaries yet the same had been declared unconstitutional by the courts.

An employer in a leading company confirmed that they had effected the deductions after KRA directed them to ensure tax is effected.

“Yes, we had to deduct this tax. It is mandatory now that the law was passed,” said the employer who sought anonymity because of fear of disclosing salary details of their employees.

Police officers who spoke to People Daily said they did not expect the deduction from their March pay.
This came after KRA directed that housing levy deductions be effected by March 19.

Authority directed employers to deduct 1.5 per cent from employees’ gross salaries and remit it together with a matching contribution of 1.5 per cent for each employee.

“With effect from March 19, all employers are required to deduct the affordable housing levy from employee’s gross salary and remit together with employer’s contribution as follows: 1.5 per cent of the employee’s gross monthly salary by the employee; 1.5 per cent of the employee’s monthly gross salary by the employer,” KRA directive.

Authority also directed all other individuals who earn income to remit 1.5 per cent of their gross income as housing levy.

Individuals are supposed to remit the levy on the 9th working day after the end of the month through KRA agent banks or mobile money.

Taxman said resident individuals, who pay the levy, shall be entitled to affordable housing relief.
“Any person who fails to comply with the law shall be liable to payment of a penalty equivalent to three per cent of the unpaid funds for every month if the same remains unpaid,” KRA said.

Deductions come after the High Court rejected a plea by five petitioners, led by Nakuru doctor Magare Gikenyi, to issue conservatory orders barring the government from collecting the housing levy of 1.5 per cent of workers monthly pay starting March pending the hearing and determination of their case.
Milimani High Court Judge Chacha Mwita instead directed that the lawsuit by Gikenyi, Pauline Kinyanjui and three others be heard in May.

He ordered the five petitioners to serve Treasury Cabinet Secretary Prof Njuguna Ndung’u, Lands Cabinet Secretary Alice Wahome, Attorney General Justin Muturi, KRA and 18 other Respondents with their pleadings within seven days.

“On the notice of motion and petition dated March 19 upon reading the pleadings, l am satisfied that the petition raises fundamental questions and requires urgent hearing. I direct the pleading to be served immediately and highlighting submissions on May 16,” judge stated.

High Court’s decision came after Ruto assented to the Bill, following its passage by Parliament.
Parliament approved the controversial Bill although it was vehemently opposed by Opposition lawmakers.

The Azimio lawmakers termed the legislation illegal and unconstitutional. During the signing of the Bill at State House last month, President William Ruto said implementation of the Affordable Housing Programme will transform the lives of Kenyans at the bottom of the pyramid by creating jobs, providing decent housing and reducing agricultural land fragmentation.

He pointed out that the housing programme will ensure families across the country live in a dignified manner. “I want to appreciate Parliament and Kenyans for their input in the Bill that I have just signed into law,” the President said.

Deputy President Rigathi Gachagua said the housing programme will provide decent homes to Kenyans.
New Act establishes a framework for the collection of affordable housing levy and implementation of the affordable housing programmes.

It also establishes accountability mechanisms including a requirement that the Board shall prepare a five–year investment programme and an annual investment programme, which shall be approved by the Cabinet and shall consequently be tabled in Parliament.

Act defines the role of county governments in affordable housing and provides for the establishment of County Affordable Housing Committees to advise governors on affordable housing programmes within their counties.

Courts had last month abolished the levy but the Kenya Kwanza administration moved to have it back through legislation.

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