By Mbatau Wa Ngai
Should we consult more? Government plans to build 500,000 housing units over the next five years
are hanging in the balance following Labour Court’s temporary suspension of orders issued to employers to begin deducting 1.5 percent housing levy from their employees’ salaries starting May 9, 2019. Justice
Maureen Onyango issued orders on Wednesday, April 17, 2019 following an application filed by the Consumer Federation of Kenya (Cofek)
who accused the government of being
“unreasonable to compel workers who will not secure a house to contribute towards house ownership (by) another person without a corresponding benefit.”
Cofek also says there is no proof that consultations were done before the insertion of section 31 (a) of the Employment Act into the Finance Act by Finance Cabinet Secretary Henry Rotich last year. The levy was originally scheduled to take effect on 1st January this year but was delayed by court injunctions.
The judge said the suspension, until next month, will allow the application to be consolidated with the other one filed in December by the Central Organisation of Trade Unions (Cotu).
On its part, Cotu had challenged the levy’s legality arguing that the scheme would increase the burden on the already over-taxed Kenyan workers.
The arguments advanced by Cotu against the levy may, however, be undermined by the International Labour Organisation’s (ILO) recommendation 1961 (No.115) that support each country’s formulation of a policy that would promote the construction of decent houses for its workers and their families. This means Cotu may support the principle of facilitating its members to own houses while allowing it to critique the implementation of such a policy.
The introduction of the levy has also received criticism from the Federation of Kenya Employers (FKE) who view it as yet another tax. The Executive Director of FKE, Mrs Jacqueline Mugo says employers are opposed to the new tax. She argues that it is not clear how the money would be used or whether employers would play any part in the management of the fund to which the deductions from the workers and their employers would be sent.
FKE and other stakeholders are apprehensive that the Sh57 billion expected to be generated annually could be open to abuse because the National Housing Development Fund (NHDF) has yet to be established by an Act of Parliament.