Taxpayers to pay Housing Levy for another month

Kenyans will continue to contribute 1.5 per cent of their salary towards the housing levy for another month.

A three-judge Bench comprising of Court of Appeal Justices Lydia Achode, John Mativo and Mwaniki Gachoka ordered the maintenance of the status quo on the collection of housing levy and other taxes introduced by the Finance Act 2023 until January 26.

The judges said the government will continue to collect the tax until January 26 when they will issue a substantive ruling on five appeals filed on whether to suspend the High court decision on Finance Act 2023 pending the hearing of the appeals.

The Court of Appeal orders suspending the implementation of the High court Judgement that declared the housing levy unconstitutional were issued yesterday after a successful application by Cabinet Secretary National Treasury and Planning Njuguna Ndungu, Attorney General Justin Muturi and Kenya Revenue Authority (KRA).

“Upon hearing the parties, all the applications are consolidated as they arise from the same judgment of the High Court dated November 28, 2023. Civil Application No. E577/2023 is designated as the lead file. The ruling on these consolidated applications will be delivered on January 26, 2024.”

Status quo maintained

 “In the meantime, the status quo obtained as of today shall be maintained until the delivery of the ruling,” the Judges ruled.

On Wednesday’s hearing, the Court of Appeal heard oral submissions from the applicants who included the Attorney General, KRA, Treasury and Parliament, with respondents led by Busia Senator Okiya Omtata, the Law Society of Kenya (LSK) and human rights groups.

The  government lawyers led by Githu Muigai put a spirited fight to have the stay order issued to allow for the deductions to continue until their appeal is determined.

Githui told the appellant judges if the High Court orders that were to lapse on January 10 were not extended they will be serious crisis and a lacuna on how will the government will collect its taxes to finance major projects and pay salaries.

“Unless this court was to protect the Kenya public,our appeal will be rendered nugatory. The consequences are unimaginable, legal constitutional crisis and the chaos that would follow are without precedent in the history of our country,” Githui stated.

However, Omtatah opposed the request for stay orders arguing that by tabling the Affordable Housing Bill, 2023, the State inadvertently conceded that there was indeed no legal framework under which the Housing Levy operates under the Finance Act, 2023.

The government argues that President William Ruto’s programme was beneficial to Kenyans owing to the jobs created.

Declared unconstitutional

Housing Levy and several other sections of the Finance Act was declared unconstitutional by a three-judge bench made of Justices David Majanja, Christine Meoli, and Lawrence Mugambi on November 28.

The three-judge bench said the Housing Levy contravened the Constitution given that only employed Kenyans faced deductions.

Notably, the government through the leader of the Majority Kimani Ichung’wah tabled the Affordable Housing Bill which also proposes deductions of 1.5 per cent for Kenyans without formal employment.

However, the progress of the bill is expected to drag in court after the Vihiga High Court in December 2023, put a pause on the public participation process until the matter is heard and determined.

Kenyans were required to give their views on the Bill by December 28, 2023.

Meanwhile, Ruto accused some individuals in the Judiciary of sabotaging his development agenda indicating that the government would disobey certain court orders.

“Our Judiciary, we respect you but judicial impunity by corrupt judicial officers must stop in Kenya...we’ll stop it and whatever it takes,” Ruto stated during a funeral in Nyandarua County.

However, the President came under sharp criticism from the opposition, the Law Society of Kenya (LSK) and Chief Justice Martha Koome.

National Assembly Speaker Moses Wetangula on his side supported the  AG and treasury CS request for grant of stay orders to allow parliament remedy the situation on Housing levy which began in December before MPs went for recess.

Wetangula through lawyer Lawyer George Murugara told the judges that his appeal is arguable and vigorous and he intend to prove that the high court erred when it declared sections 76 and 78 of Kenya roads board, the unclaimed assets act, the statutory instruments act and Section 84 of the Finance Act 2023 in which the housing levy is based unconstitutional.

He stated that Section 88 and 89 of statutory instruments all touch on the three arms of government.

“Some of the statutory instruments touched on government entities with revenue collection including the tribunals and if these are not kept alive some institutions may come to an end or die and therefore there will be a lacuna in the running of government to the detriment of its citizens, “ Murugura said.

They include National Technical Referral Hospital Regulations, Bomet University Regulations, the Kenya Technical Trades College Regulations, Kisumu National Polytechnic Regulations, Eldoret National Polytechnic Regulations, the Kenya Institute of Mass Communication.

Kenya Revenue Authority through lawyer Gaya Ochieng urged the court to impose stay orders saying it risks being jailed for contempt of court if an application on housing levy refund is made.

“If the orders are not granted KRA and Ministry of Housing will be cited for contempt of court if any application for refund is made. It is in good order and the public interest that order of stay be granted at this stage, “ Ochieng sought.

The court heard that there is a mechanism for the KRA and Ministry of Housing to refund the taxes so far collected.

“ These are funds that the persons who paid them can be identified, hence the refund process can be revoked depending on how the court will rule. On the other hand can the government recover the answer is no. Why? These are general members of the public counting to millions how you will invoke the recovery process for the said amounts and period,” Ochieng said.