President William Ruto Wednesday pleaded with the Court of Appeal to allow his government to continue collecting the controversial housing levy, pending the hearing of an appeal challenging its legality.
Through Attorney General Justin Muturi, Dr Ruto said through his affordable housing programme, the government has created 120,000 jobs and anticipates to construct 258,874 units annually, which would be thrown into jeopardy.
The High Court last year found the housing levy illegal, stating that it was discriminatory as it targets those in formal employment alone.
A bench of three judges, however, suspended the decision until January 10, to allow the government appeal against the decision.
Wednesday, Mr Muturi told Court of Appeal judges Hannah Okwengu, John Mativo and Mwaniki Gachoka that over the past six months since the housing levy came into effect, there have been milestones achieved including more funds made available for the affordable housing project pipeline.
Mr Muturi said 39,879 units have been launched, with a further 32,420 units earmarked for launching.
“Infrastructure projects initiated pursuant to the affordable housing, and in line with the government’s objective to facilitate affordable housing for the public, are presently [sic] underway. In the absence of a stay, the abrupt halt to these projects will lead to irreparable damage, significant impacting the economy,” Mr Muturi said in submissions filed in court.
The affordable housing fund is gross-on-gross taxation on workers' income where the Kenya Revenue Authority (KRA) uses same gross pay to calculate the Pay As You Earn, a form of double taxation. Every employee contributes 1.5 percent, matched by a similar percentage by the employer.
The sentiments were supported by Treasury CS Njuguna Ndung’u stating that the government has been collecting Sh5 billion monthly with an estimated Sh73 billion annually using the challenged Finance Act.
Kiragu Kimani said although the consequences of barring the government from collecting the taxes are irreversible, Kenyans being deducted can get a refund in case the court finds the levy unconstitutional.
“If the stay order sought herein is not granted, the government would have lost an opportunity to collect revenue required for the implementation of the affordable housing programme. This effect is irreversible,” he said.
The application was opposed by among others, Katiba Institute, Law Society of Kenya, Tribeless Youth as well as Busia Senator Okiya Omtatah and Eliud Matindi.
Katiba Institute through lawyer Dudley Ochiel pleaded with the court to stop the levy, saying the government introduced regressive tax measures that burden low-income earners, thus threatening their right to livelihood. The court will rule on January 26.