Court declares house levy unconstitutional to be paid back with arrears

Teachers and other salaried workers will soon start to enjoy an enhanced pay after the High Court declared the housing levy proposed by the Kenya Kwanza government unconstitutional.

They will also receive the housing levy (arrears) deducted from their payslips from July to November 2023.

During the ruling on petitions filed challenging the Finance Act 2023, Justice David Majanja ruled that the court has found the levy to have violated Article 10, 2 (a) of the constitution.

“We find that the introduction of the housing levy amendment to section 84 lacks a comprehensive legal framework in violation of Article 10 of the constitution, that levy against persons in formal employment without justification is discriminatory and irrational,” Majanja read in his judgement on behalf of a three-judge bench.

The other two judges included Lawrence Mugambi and Christine Meoli.

While ordering that no charges should be further collected, Justice Majanja ruled that sections 84, 72 to 78 of the Finance Act have also been termed null and void.

“An order is granted prohibiting the respondent from collecting, charging on otherwise the charge known as the affordable housing act,” he said.

The Levy, a cardinal pillar in the Finance Act, started being deducted from formally employed Kenyans in July, with the Kenya Revenue Authority (KRA) mandated as the collecting agent.

Employers have been remitting their 1.5 percent contribution alongside a similar rate for their employees as well.

Government had cited that the unwelcome deduction would enable them achieve their ambitious plan of constructing affordable homes for low-earning Kenyans.

The Finance Bill 2023 was passed by parliament on June 22, 2023, and later assented by President William Ruto on June 26. 

The High Court later suspended the implementation of the act on June 30, after multiple petitions were filed. 

On July 29, the Court of Appeal lifted the suspension, leading to a hearing of the case on September 13.  

Busia Senator Okiya Omtatah and six others moved to court seeking to stop the implementation of the Finance Act 2023.