22 senators lead fresh onslaught on Ruto's housing levy

President William Ruto's plan for affordable housing is facing a fresh onslaught after three more cases were filed on Tuesday.

The petitioners are challenging the implementation of the housing levy and ongoing demolition of property to pave way for the affordable houses. The new suits also seek to kick out the Kenya Revenue Authority (KRA) as the agent for collecting the housing levy.

They argue that KRA cannot be used as an agent to collect the levy as there is no law allowing it to do the same. The total number of cases challenging Ruto's pet project is now seven.

The elephant in the room this time is the government’s failure to consider the majority voices against the levy, and failure to give notices to those who are affected by demolitions and KRA’s powers.

As 22 Senators were firming up their case against the Attorney General, the National Assembly, the Treasury and KRA, the Trade Union Congress of Kenya (TUC-KE) had already thrown its first jab.

Housing levy is being hunted from all corners. Senators in their case went for the process through which the new levy was assented to law by President Ruto.

They claimed that the process was simply a fraud by the Kenya Kwanza regime.

The senators who have filed the petition are Okiya Omtatah, Stewart Madzayo, Enoch Kiio Wambua, Ledama ole Kina, Edwin Sifuna, Okong’o Omogeni, Moses Kajwang Otieno, Godfrey Osotsi, Mohamed Faki Mwinyihaji, Johnes Mwaruma, Crystal Asige, Dan Maanzo, Agnes Kavindu Muthama, Dr Oburu Odinga, Richard Onyonka, Beatrice Oyomo, Catherine Muyeka Mumma, Hamida Kibwana, Hezena Lamaletian, Dr Beth Kalunda Syengo, Shakila Abdalla Mohamed, and Eddy Gicheru Oketch.

Others are Senators Eliud Matindi, Benson Odiwour, Victor Okuna, Florence Kanyua, Juma Isaac and former Nandi Hills MP Alfred Keter.

They claimed that there was no public participation when the new Bill was introduced in Parliament.

In the meantime, the TUC-KE case revolved around the implication of the housing levy on Kenyan pockets.

The union argued that the government wants to deduct more than a third of taxpayers' salaries, which is contrary to the employment and labour laws.

Then there was the case filed by Moses Nthurima, an advocate. The crux of his case was that the government failed to factor in salient issues raised by Kenyans including overwhelming opposition against the levy.

He said that it is illegal and unfair to have a person who is paying a mortgage or having their own home or retired to be forced to pay the levy.

Nthurima was of the view that it should be a voluntary scheme. He suggested that the Kenya Kwanza government should instead create an enabling environment instead of pushing it down peoples’ throats.

“The housing levy is mandatory towards Kenyan citizens. What Kenyans want is an enabling environment. They desire free financing to be able to build their homes, they desire affordable materials for them to build their houses,” argued Nthurima.

The mandatory affordable housing levy threatens the social and economic interests of Kenyans, he said.

“The government is forcing citizens to contribute to a mandatory scheme in a country where most of its citizens are already grappling with harsh economic times due to multiple layers of taxes,” he said.

Further, Nthurima argued that the government ought to have exempted anyone who is above 50 years and who is engaged in informal businesses.

He wants employees who are nearing retirement and those who are low-income earners to be exempted from paying the housing levy.

“The Act did not consider different payments for different categories of employees, noting that having a uniform percentage deduction will work against those with low income,” he argued.

Nthurima targeted 19 sections of the Affordable Housing Act which he wants to be declared unconstitutional.

Affordable Housing Act 2024 was tabled before the National Assembly on December 7, 2023. It was assented to by President Ruto on March 20, 2024.

However, Senators led by Busia’s Omtatah argue that the current law does not provide for accessible and adequate housing with reasonable standards of sanitation.

“There is nothing in the Act about ensuring that people who live in extreme poverty are able to obtain and maintain adequate shelter and reasonable standards of sanitation. In fact, the words ‘poverty’ and ‘poor’ don’t appear anywhere in the Act.”

“The Act is about people of “means” who can afford to purchase or rent what the Act defines as affordable housing units. Even in Section 49(3), the Act gives preference only to the able who come from marginalised persons, vulnerable groups, youth, women and persons with disabilities,” argued senators. 

The court heard that estimates by the Kenya National Bureau of Statistics for the period between 1999 and 2009 indicate that families without houses increased from 889,696 to 1,166,138. 

The senators noted that this translated to 13.3 per cent of total households while those in some form of lack increased from 3,368,135 to 4,454,121(50.8 per cent) of all households over the same period. 

They asserted that the Act does not give a solution for dealing with those without houses and there are no initiatives to empower the poor to build houses.

At the same time, senators claimed that the law is silent on rural housing as the populace has their own houses.

“The Act is blind to the fact that most rural inhabitants provide their own shelter using locally available building materials. Although rural housing has been adequate in quantum, it has sometimes been lacking in quality and access to basic services such as sanitation. The Act does not address this challenge,” senators said.

They also claimed that the Senate failed to protect devolution by allowing the government to continue hiving off land from the counties and constructing affordable houses.

The senators argued that the housing function is devolved and the government only ought to come up with policies.

The court heard that the upper house also limited public participation while the lower house was barred by the High Court from conducting the same.

They said there was no adequate public participation while the majority of Kenyans opposed the levy.

The group is also aggrieved by the application of the levy backwards. According to them, Section 84 of the Finance Act, 2023 was declared unconstitutional by the High Court and, hence, cannot be used as the anchor of the new law.

Senators also argued that the 1.5 per cent levy rate is ambiguous. They asserted that there is no formula or process through which the government arrived at the percentage.

“The rate just popped up for the first time in the quashed Section 84 of the Finance Act, 2023. There has been no study to show what operating the fund in any financial year or for any period would cost and that the revenues to be raised by the levy at that rate are required. Otherwise, Kenyans risk being overtaxed to raise excess funds that are not required,” they claimed.

Senators also argued that KRA cannot be used as an agent to collect the levy as there is no law allowing it to.

They also questioned the move to entrust a board with the funds. According to them, the law is unclear on who in the board will be responsible for answering how the levy is collected and used.

The court heard that the Act is vague. 

Senators listed a total of 18 prayers for the court to consider.

TUC-KE in its case argued that the housing levy deductions will reduce workers to slaves. The union asserted that the taxes paid by Kenyans have surpassed the required threshold.

The union wants the court to find that the government cannot hunt for the money it seeks to build houses.

It also argued that there is no evidence to show how the money will be accounted for. In addition, it faulted the government’s move to demolish houses in a bid to build new ones.

“To subject an employee to servitude contrary to Article 30 of the Constitution by employing part of their hard-earned income on a project without their consent. It infringes on the employees' right to fair labour practices by placing the burden of housing on them which burden has been on the employer,” it argued.