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Housing Levy saga: Attorney General Muturi delivers final blow to KRA

Brian Murimi by Brian Murimi
February 28, 2024
in News
Reading Time: 2 mins read

The Attorney General of Kenya, Justin Muturi, has advised the Kenya Revenue Authority (KRA) that there is no legal basis for implementing or collecting the Housing Levy, a controversial tax introduced by the Finance Act of 2023.

In a letter dated 21st February, 2024, Muturi said that the High Court had declared the Housing Levy unconstitutional in November 2023, and that the Court of Appeal had not granted any stay or conservatory orders to suspend the ruling.

The Housing Levy was meant to fund the government’s affordable housing agenda, which aimed to build 500,000 low-cost houses by 2025. The levy required employers and employees to each contribute 1.5% of their monthly basic salary to the National Housing Development Fund.

However, the levy faced strong opposition from various stakeholders, including trade unions, employers, civil society groups, and members of parliament, who challenged its legality and feasibility in court.

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Muturi said that the KRA, as a respondent in the case, was bound by the High Court’s decision and could not proceed with the collection of the levy until the matter was resolved by the Court of Appeal.

“It is noted that the Housing Levy was introduced by section 84 of the Finance Act, 2023. However, upon determination of the High Court in Constitutional and Human Rights Petition 181, 211, 217, 219, 221, 227, 228, 232, 234, 237 and 254 of 2023 (Consolidated) by Majanja, Meoli & Mugambi, JJ on 28th November, 2023, the imposition of the Housing Levy was declared unconstitutional,” Muturi wrote.

He added: “The High Court in the same matter, granted an oral application for the stay of execution until the filing of a formal application for stay or conservatory orders in the Court of Appeal or 10th January, 2024. Upon the determination of the filing of the formal application for stay or conservatory orders in the Court of Appeal via Court of Appeal Civil Application 577, 581, 585 of 2023, the Court of Appeal did not grant any stay or conservatory orders.”

Muturi said that the KRA should await the final outcome of the appeal before taking any further action on the levy.

“In view of the foregoing, it is our considered opinion that there is no legal basis for the implementation or collection of the Housing Levy as envisaged under section 84 of the Finance Act, 2023. We therefore advise that you await the final determination of the appeal before proceeding with the implementation or collection of the levy,” he concluded.

The letter was addressed to Humphrey Wattanga, the Commissioner General of the KRA, who had sought guidance from the Attorney General on the government’s position on the levy.

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Brian Murimi

Brian Murimi

Brian Murimi is a journalist with major interests in covering tech, corporates, startups and business news. When he's not writing, you can find him gaming, watching football or sipping a nice cup of tea. Send tips via bireri@thesharpdaily.com

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