The High Court of Kenya has declared the Housing Levy unconstitutional. The levy which was introduced in July 2023, required formally employed Kenyans to contribute 1.5% of their salaries towards the construction of affordable housing.
In his ruling, Justice David Majanja stated that the levy violated Article 10 of the Constitution, which requires that all laws must be based on clear and unambiguous principles. He also found that the levy was discriminatory, as it only applied to people in formal employment.
“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,” Justice Majanja said.
The High Court’s decision is a major blow to the Kenya Kwanza government, which had touted the Housing Levy as a way to address the country’s housing shortage. The government has not yet commented on the ruling.
The Housing Levy was met with widespread criticism from the start, with many Kenyans arguing that it was an unfair burden on working people. The Federation of Kenya Employers (FKE) also expressed concern about the levy, arguing that it would add to the cost of doing business in Kenya.
In addition to being declared unconstitutional, the Housing Levy has also been criticized for its lack of transparency. The government has not released any details about how the money collected from the levy will be used.
Timeline of Events
- June 22, 2023: The Finance Bill 2023 is passed by parliament.
- June 26, 2023: The Finance Bill 2023 is assented by President William Ruto.
- June 30, 2023: The High Court suspends the implementation of the Finance Act 2023.
- July 29, 2023: The Court of Appeal lifts the suspension of the Finance Act 2023.
- September 13, 2023: The High Court hears a case challenging the constitutionality of the Housing Levy.
- October 4, 2023: The High Court declares the Housing Levy unconstitutional.
The High Court’s decision is a victory for those who opposed the Housing Levy. It is also a reminder that the government must be accountable to the people and that it cannot simply impose new taxes without proper justification.
- The government has not yet commented on the High Court’s decision.
- It is unclear whether the government will appeal the decision.
- The government may need to find a new way to fund its affordable housing program.
The High Court’s decision is a significant development in the ongoing debate about the role of the government in the economy. It is a reminder that the government must act in accordance with the law and that it cannot simply impose new taxes without proper justification.