Government to Adjust Policies After High Court Deems Housing Levy Unconstitutional, Says President Ruto
In a landmark decision on Tuesday, the High Court in Nairobi declared the Housing Levy introduced by President William Ruto as unconstitutional, sparking a wave of celebrations among Kenyans. The ruling, delivered by a three-judge bench comprising Justices David Majanja, Christine Meoli, and Lawrence Mugambi, stated that the levy, which imposed taxes solely on formally employed Kenyans while excluding those in the informal sector, was discriminatory, irrational, arbitrary, and in violation of the Constitution.
“The levy against persons in formal employment to the exclusion of other non-formal income earners without justification is discriminatory, irrational, arbitrary, and against the constitution,” Justice David Majanja ruled.
The decision prompted State attorneys to request an order preventing Kenyans from seeking Housing Levy refunds. However, Justice Mugambi noted that budget estimates were legally presented and that the Finance Bill was in line with Article 114 of the Constitution, categorizing it as a money bill. Yet, the court found that the Finance Bill contained extraneous matters that were unconstitutional.
While satisfied with the adequacy of the public participation process conducted by the National Assembly, the court faulted the Parliamentary Committee for neglecting proposals put forward by Kenyans. Petitioners had argued that the National Assembly erred by not involving the Senate in formulating the law.
In response to the court’s ruling, President Ruto addressed the public during the 5th Congress of the International Trade Union Confederation-Africa at Safari Park Hotel in Nairobi. He expressed the government’s commitment to respecting the court’s decision and making necessary adjustments to align with the Constitution.
“The courts have said we have to re-adjust the law. This is what we are going to do. We will do as the courts have said on the housing levy,” President Ruto affirmed.
However, he maintained that the affordable housing project was crucial for creating employment opportunities for the youth. President Ruto highlighted the success of the pilot housing project, stating, “I want to report to you, in the last 8 months we have created 120,000 jobs from our housing plan.”
Emphasizing the importance of worker welfare, President Ruto declared the government’s dedication to aligning labor policies with international standards. He underscored the commitment to upgrading occupational safety and health, as well as work injury benefits regimes.
“Our determination to actualize the best standards of worker protection and welfare has inspired us to endeavor to align our labor policy framework with all international labor standards that have been ratified by Kenya,” President Ruto stated.
President Ruto’s administration faced criticism over the Housing Levy, with some claiming it primarily benefited the government rather than the intended beneficiaries, the Kenyan citizens. In response, Ruto refuted such claims during his address at the Congress, asserting that the housing project aimed at improving living conditions and creating jobs.
Meanwhile, the High Court’s ruling not only declared the Housing Levy unconstitutional but also ordered the government to cease collection, citing violations of key constitutional provisions. The court granted stay orders requested by the government, allowing the retention of Housing Levy funds for 45 days. This temporary relief means that salaried Kenyans will continue paying the levy until January 10, 2024.
Senator Okiya Omtatah, who played a crucial role in challenging the Finance Act, expressed his satisfaction with the court’s decision. “The High Court Bench has declared the Housing Levy unconstitutional for violating key provisions, including singling out the formal sector,” Omtatah celebrated.
In the wake of the court ruling, Kenyans are jubilant, considering the Housing Levy as an unjust burden on salaried workers. The decision aligns with the sentiments expressed by Senator Omtatah in earlier public addresses, where he warned President Ruto about potential legal challenges if the levy was not removed.
“I have looked at the Finance Bill (Amendment) 2023 and it goes against the Constitution of Kenya in about six Articles. I am asking you to respect the Constitution and remove all of them because if you don’t, we are going to fight it out in court,” Senator Omtatah had cautioned during a public address attended by President Ruto.
As the government prepares to make adjustments to comply with the court’s directive, the fate of the Housing Levy remains uncertain. Kenyans will eagerly await further developments and potential changes to the policies surrounding this contentious levy.