Union says that there were no adequate consultations with stakeholders before Sasra hiked the levy, terming the action punitive to members who make deposits expecting returns.
Sasra on August 20 notified all deposit taking saccos that a legal notice increasing the charges had been approved by Parliament on April 10 and that the rate was payable with effect from January 2018.
The union, which claims to have 3,560 saccos as members with 177 regulated by Sasra, argues that the increment will impose significant costs, affecting returns for its members.
The sacco industry lobby has sued the Sacco Societies Regulatory Authority (Sasra) over its move to increase the levy on deposit from 0.1 per cent to 0.175 per cent.
Kenya Union of Savings and Credit Co-operatives Limited (Kuscco) says that there were no adequate consultations with stakeholders before Sasra hiked the levy, terming the action punitive to members who make deposits expecting returns.
Sasra on August 20 notified all deposit taking saccos that a legal notice increasing the charges had been approved by Parliament on April 10 and that the rate was payable with effect from January 2018.
“That the honourable court be pleased to issue an interim conservatory order suspending and/or staying the implementation of respondent’s legal notice number 51 of February 22, 2018 pending hearing and determination,” reads one of the orders sought by the union.
Kuscco, which claims to have 3,560 saccos as members with 177 regulated by Sasra, argues that the increment will impose significant costs, affecting returns for its members.
The union argues that cooperatives are a devolved function and the regulation passed by the National Assembly is illegal since it did not involve the Senate.
Further, it claims that the levy is imposed on the total deposit of each sacco which it terms punitive.
According the schedule attached to the petition, the levy will be 0.125 from January to December 2018, and subsequently rise to 0.15 per cent from January 2019 to December, and from January 2022 it will peak at 0.175 per cent. The union says deposits made by members are from net salaries and incomes already taxed by the government and imposing another levy amounts to double taxation.
Kuscco says the increase in the levy will negatively affect bonuses and dividend to members and is likely to affect members’ morale and willingness to continue contributing.
It further claims that saccos pay licence fees and taxes to the national and county governments, terming the increment oppressive.
It argues that the deposit has grown over the years giving Sasra more levy, noting that there are no reasons to increase the percentage.
The union accuses Sasra of seeking to burden saccos with unreasonable financial obligations emanating from its operations.
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