Workers' unions, employers and lobbies have opposed Treasury’s
move to introduce a housing levy, describing it as an unnecessary
burden.
Workers’ unions and the Federation of Kenya
Employers (FKE) said the levy is likely to lead to reduction in salaries
and loss of jobs.
The Institute of Economic Affairs
(IEA) Executive Director Kwame Owino termed the levy a backdoor strategy
by the government to raise revenue from heavily taxed formal workers.
Mr
Owino said housing was largely a private affair, adding: “The
government needs to first seal loopholes, deal with errant civil
servants and their accomplices to gain Kenyans’ confidence before asking
them to make contributions towards the soon-to-be established National
Housing development Fund (NHDF),” he said.
In his last budget, Treasury Secretary Henry Rotich proposed the
introduction of a 0.5 per cent statutory levy on employees' gross
salaries with a monthly maximum of Sh5,000 for high income earners and
employers expected to contribute a similar amount for every employee to
the NHDF.
The Kenya Union of Commercial, Food and
Allied workers General Secretary Boniface Kavuvi said the government did
not consult them and wondered how workers were expected to accept the
new tax without any public education.
The Kenya Medical
Practitioners and Dentists Union chairman Dr Samuel Oroko said the levy
amounted to double taxation since Kenyans already pay income and Value
Added Tax on nearly all products they buy.
“See all the
billions being siphoned by civil servants all over the place as well as
corruption that allows untaxed goods onto our retail shelves. The
government must first make people who divert public funds to private use
pay dearly,” he said.
FKE said most Kenyans were still
suffering from the adverse effects of last year's prolonged
electioneering period that disrupted the business environment and that
most workers are heavily taxed at 30 per cent corporate tax. The
federation said it will schedule a meeting with the Housing ministry to
thrash out some of the concerns on the issue.
Corrupt practices
Its
executive director Jacqueline Mugo said the talks will focus on
governance structure of the fund, its implementation modalities and how
companies with housing plans for their employees will be treated.
The
government’s involvement in provision of housing has always been bogged
down by corrupt practices. In 2012, an assistant minister and some top
government officials allocated themselves houses at the National Housing
Corporation (NHC) residential estates in Kileleshwa, Madaraka and
Lang’ata.
Unionists and employers feel the estimated
Sh2 billion monthly statutory kitty risks being abused since the
government has resolved to eject workers and employers’ representatives
from the National Social Security Fund and national Hospital Insurance
Fund.
Central Organisation of Trade Unions Secretary
General Francis Atwoli said issues touching on workers require
representation to guard against embezzlement of funds and unwise
investments. “NHDF remains an amorphous entity where neither workers’
nor employers’ representatives have been briefed. Such funds need
supervision to ensure workers benefit to the last penny,’ he said.
Housing
Principal Secretary Charles Hinga has strongly defended NHDF’s
integrity, saying all funds received will be spent well and that
individual contribution will be used as a guarantee for the housing
units they choose.
According to the Kenya National
Bureau of Statistics, formal workers in low-cadre up to lower-middle
income group earning between Sh15,000 to Sh49,000 account for 74.44 per
cent and are deemed legible for the government-fronted tenant purchase
schemes.
A further 22.62 per cent in the middle income
group that earns between Sh50,000 to Sh99,000 will be helped to access
subsidised mortgages.
The upper income group with
Sh100,000 and above numbering about 74,000 individuals are expected to
meet their housing needs but will contribute a maximum of Sh5,000
towards the housing fund for the less fortunate.
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