National Assembly clears 1.5pc housing levy on gross pay

 

President William Ruto's administration scored another legislative victory on Wednesday after the National Assembly passed the controversial Affordable Housing Bill 2023, which seeks to give the government the green light to resume implementing the President's pet homes programme without running afoul of the law.

The Bill, which will now be sent to the Senate for concurrence, will anchor in law the decision to collect a 1.5 percent levy on workers' gross pay.

The Bill was passed as per the President's wishes in his speech during a joint retreat for the ruling Kenya Kwanza coalition's legislators and the Executive in Naivasha on Monday.

Going by the way the ruling coalition whipped its members to support the controversial Bill, it is unlikely to be reversed by the Senate.

However, the passage of the Bill was not without opposition after about 20 Azimio la Umoja One Kenya Coalition MPs walked out of the House while it was being considered at the committee stage (third reading).

"Our members had amendments but it looks like there are instructions to pass the Bill as it is," Minority Whip Junet Mohamed said, adding, "We have decided to walk out and let the matter be dealt with in the court of public opinion."

The opposition MPs had sought to have the 1.5 percent levy imposed on basic or net salaries as opposed to gross monthly salaries.

"If you want to impose the levy on net salaries to reduce the amount, we will not support it," said Kimani Ichung'wah, the National Assembly Majority Leader.

Efforts by Githunguri MP Gathoni Wamuchomba to have the 1.5 percent levy removed from the Bill also failed, as did her attempts to have the National Housing Corporation (NHC) take charge of the affordable housing programme, rather than creating another body.

Ms Wamuchomba was concerned that creating another body would lead to duplication of roles.

The Bill was tabled in Parliament in December last year after the High Court ruled that the housing levy, which was introduced following an amendment to the Labour Act by the Finance Act 2023, was unfair, discriminatory and unconstitutional as it limited the levy to formal sector employees.

The proposed law seeks to establish the Affordable Housing Fund, into which the levies deducted from salaries are to be paid, to be managed by a board of directors.

In order to address the issues raised by the court, the Bill has extended the imposition of the affordable housing levy to incomes other than salaries paid to employees in the formal employment sector.

The Azimio MPs have since indicated that they intend to challenge the Bill in court once it is signed into law.

"This is not a legislative process; it is a charade. It is a House of Parliament rubber-stamping a lawmaking process, and we will not be part of it," Mr Mohamed said.

He noted that a majority of Azimio lawmakers were forced to approve the bill on second reading Tuesday night or risk having government-funded projects in their constituencies stopped.

In a bid to actualise this, the National Assembly has appropriated and ring-fenced Sh73 billion in the current financial year's budget for the project, which seeks to promote home ownership among Kenyans.

By DAVID MWERE