Cabinet Secretary for Lands, Housing, and Public Works, Alice Wahome, has issued a directive mandating employers to continue deducting the housing levy from employees’ gross salaries. T
his directive extends to include the employers’ contribution, with the funds required to be remitted to the Kenya Revenue Authority (KRA) promptly. Secretary Wahome has cautioned against non-compliance, warning of potential financial penalties.
This directive follows a High Court decision temporarily suspending a prior ruling that deemed the housing levy unconstitutional. The suspension, effective until January 10, allows the government time to appeal the decision. Notably, the KRA, Attorney-General Justin Muturi, and National Assembly Speaker Moses Wetangula had jointly sought a 45-day stay on the ruling.
Justice David Majanja, in a concise statement, affirmed the court’s authority to grant a stay, underscoring the ongoing judicial process. This interim decision recognizes the government’s right to appeal, resulting in a temporary halt to the enforcement of the earlier judgment that declared the housing levy unconstitutional.
The initial ruling had significant implications for President William Ruto’s housing program, finding that Section 84 of the Finance Act, introducing the Housing Levy, failed to adhere to equitable taxation principles. The court observed that the levy created a disparity between the formal and informal sectors, leading to unequal treatment under the law.
CS Wahome’s statement underscores the housing levy’s importance in the government’s housing strategy, asserting that the employer’s contribution qualifies as a deductible under Section 15 of the Income Tax Act. She stressed the legal consequences of neglecting the levy, indicating that non-compliant employers could face a penalty of two percent of the unpaid amount for each month of delay.
While the country awaits the formal appeal in the Appellate Court, this directive serves as a provisional measure to sustain the government’s affordable housing initiative. Employers now find themselves navigating the balance between compliance with Secretary Wahome’s directive and the dynamic legal landscape surrounding the housing levy.
