The housing levy would amount to a substantial estimated KSh50bn ($492.7m) annually from Kenya’s 3.94 million taxpayers.
But only if it can navigate several court cases filed by the umbrella workers’ union and a consumer lobby group. The Federation of Kenya Employers executive director Jacqueline Mugo calls calls implementing the levy “unlawful”.
The revenue authority and the government announced the onset of the levy in a press release which tasked employers to start deducting it by 9 May.
The unpopular levy was announced in June last year, and although it has increased from a 0.5% proposed rate at the time, retains many of the initial aspects of the proposal:
- employees will contribute 1.5% of their basic salary;
- employers will contribute an equal amount;
- both will be capped at KSh2500.
The government’s plan is to build 500,000 affordable houses in the next five years and then sell them to its citizens through mortgages or a tenant purchase scheme.
On the project website, the government says that 213,068 people have already registered for the affordable housing plan.
The houses will be built by private companies and then sold to qualified applicants determined by a lottery.
- In the press release, it also said that those who do not get a house will be allowed to transfer their money to a pension scheme or withdraw it.
- Curiously, the cabinet secretary for transport, infrastructure, housing and urban development, James Macharia, also said that the employer’s contribution was non-refundable.
Source: theafricareport
