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Economy

Kenyans oppose housing levy, survey reveals

Workers at an affordable housing scheme project
Workers at an affordable housing scheme project in Ngara, Nairobi. FILE PHOTO | NMG 

More than half of Kenyans are opposed to the government's 1.5 percent levy to be deducted from the basic salaries of employees to fund the National Housing Development Fund, a new survey has shown.

According to the latest AfroBarometer Network Kenya Round 8 Survey, which was released last week, 53 percent of the Kenyans interviewed said they do not support the implementation of the new levy. Forty one percent said they support it.

During the Jamhuri Day celebrations on Thursday, President Uhuru Kenyatta asked MPs to change the law to make the levy a voluntary contribution.

The Finance Act, 2018 made it mandatory for all employees to contribute a percentage of their basic salaries to the pool, with the highest individual contribution not exceeding Sh5,000.

Employers were required to deduct and remit the levy by the ninth day of each succeeding month effective May.

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However, last year, lobby groups led by the Central Organisation of Trade Unions (Cotu), the Trade Union Congress of Kenya, the Consumer Federation of Kenya (Cofek) and the Federation of Kenya Employers (FKE) went to court to challenge the new levy. The court suspended its implementation until the case is heard and determined.

On Thursday, Mr Kenyatta said that the contribution would be voluntary, lifting a big burden from the back of Kenyans particularly those who already own homes. The move will also save employers from incurring the cost of deducting and remitting the contribution.

According to the AfroBarometer survey, majority of Kenyans living in urban areas – 56 percent - do not support the introduction of the levy. Of those who live in rural areas, 51 percent said they do not support the levy. Only 39 percent of urban dwellers and 42 percent in rural areas said they support the controversial levy.

When lobby groups went to court to challenge the levy, they argued that it would increase the burden on workers and employers who were already being overtaxed. In response, Justice Hellen Wasilwa of the Employment and Labour Relations Court quashed its implementation.

Informed by mounting opposition, Mr Kenyatta last week announced that payment of the levy would be made voluntary and directed the Ministry of Housing to initiate amendments to the Housing Fund Levy so that MPs can amend the law in the new year.

AfroBarometer Co-National Investigator Peter Kamau said during the release of the survey results that more Kenyans are against additional taxes because they are already overtaxed.

"It seems most Kenyans are unhappy with the taxation to fund the project as they are already feeling the pinch of the economy. They are basically saying they do not want any more responsibilities," Mr Kamau said.

The survey was conducted between August 28 and September 26 and involved a sample size of 2,400 adults across the country.

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