High Court Invalidates Controversial Housing Levy

For the next month, Kenyans will still be required to pay the Housing Levy, despite a High Court ruling that found the law unconstitutional.

However, the court has opted to postpone its ruling until January, granting the government the opportunity to contest the decision at the Court of Appeal. Justices Majanja, Christine Meoli, and Lawrence Mugambi recognize that their judgment is not definitive and have allowed for a delay until January 10, 2024. This verdict is reached following appeals from the Kenya Revenue Authority, Attorney General, and Speaker of the National Assembly, Moses Wetang’ula, requesting a 45-day extension.

The housing levy fronted by President William Ruto has received a setback from the judgement of the three-judge Bench, who deem it biased and unjust. Their ruling states that the inclusion of the Housing Levy through an amendment to the Employment Act violated the principles of taxation and resulted in inequality by differentiating between the formal and informal sectors. Since the enactment of the Act in July 2023, all workers, irrespective of their employment status, have been making contributions to the Affordable Housing Fund.

The court's decision also confirms that the Finance Act, 2023 is classified as a Money Bill, meaning it does not need approval from both the Speakers of the National Assembly and Senate. Although there were some flaws in the process of passing certain parts of the Finance Act, the judges have stated that these errors were not substantial enough to nullify the law. Additionally, the court has upheld the constitutionality of the 16% VAT on insurance premiums, the digital asset tax, and the betting tax, affirming that these taxes fall under the authority of Parliament.

Justices Majanja, Meoli, and Mugambi dismiss the contentions of Senator Okiya Omtatah and other petitioners asserting that the amendment of section 2 of the Finance Act, which levies taxes on entertainment, hinders the functions of county governments. They proclaim that the amendment neither obstructs nor influences the responsibilities of county administrations. The contention was made that it was necessary for both Speakers to deliberate on whether the Bill pertained to counties, and if so, to determine whether it fell under the category of a special or ordinary Bill.