Affordable Housing: Court Stops Gov't Plan to Impose 1.5 Percent Housing Tax on Kenyan Workers

The court on Wednesday issued orders suspending the government's plan to impose a tax on all Kenyan employees' salaries as a contribution to the National Housing and Development Fund.

Employment and Labour Relations Court's Justice Hellen Wasilwa has issued the orders following a petition lodged by Central Organization of Trade Unions (Cotu) through Secretary General Francis Atwoli.

The government had planned to impose a 1.5 percent value added tax (V.A.T) on salaries of all employees beginning January 1st, 2019 with funds collected going towards affordable housing project, one of President Kenyatta's big four agenda.

In his petition, Atwoli argues that the government didn't conduct public participation before deciding to impose the levy on Kenyan workers' income.

“That the matter is extremely urgent as the application seeks to stop the irregular imposition of 1.5 % VAT on salaries of the employees as there was no public participation in the Amendment Act 2007 through section 86 of the Finance Act, 2018,” reads the court order.

Cotu further submits that implementation of the levy is in defiance of the express decision of the union as well as the people of Kenya and threatens good order. Atwoli further says that government should not resort to overtaxing citizens if it fails to meet revenue targets.

“The petitioner is opposed to the proposed amendments due to the fact that they don’t promote good governance, accountability, and transparency," says Atwoli in court papers.

“Stop the theft of public money and recover stolen public money and properties to plug gaps in the national Budget."

Cotu names National Treasury Cabinet Secretary Henry Rotich, his Transport, and Infrastructure counterpart James Macharia, and the Attorney-General Paul Kihara as respondents in the case, while Federation of Kenya Employers is named as an interested party.