By Edwin Nyarangi
President William Ruto’s desire to provide affordable housing for majority of
Kenyans regardless of their social and economical status, was ultimately given the nod yesterday.The development closed the debate on one of the most
contested pieces of legislation in recent times. But even as he affixed his
signature and seal to the law that will inject Sh63 billion in form of taxes
into the 2023-2024 financial year, Ruto acknowledged the opposition he had
faced.
“I have been asked on several occasions why I am forcing Kenyans
to own houses. It is my obligation to ensure citizens have decent and
affordable houses, that is why I asked MPs to support the affordable housing
Bill,” Ruto explained.
Last
year, three judges of the High Court ruled that the introduction of the Housing
Levy through amendment of the Employment Act by Section 84 of the Finance Act,
2023 lacked comprehensive legal framework in violation of Articles 10, 201, 206
and 210 of the Constitution.
Justices David Majanja, Christine Meoli and Lawrence Mugambi
further said the imposition of the housing levy against persons in formal
employment to the exclusion of other non-formal income earners to support the
national housing policy, is without justification, unfair, discriminatory and
irrational.
·
.The Court of
Appeal ruled in January that
introduction of Housing Levy through amendment of the Employment Act by Section
84 of the Finance Act, 2023 lacks a comprehensive legal framework.
Justices Lydia
Achode, John Mativo and Mwaniki Gachoka concluded that public interest tilts in
favour of not granting the order sought by the government to continue
collecting the housing levy.
Attorney General Justin Muturi had pleaded with the court to allow
the collection of the levy arguing that it had created more than 120,000 jobs
since it was started six months ago.
In Parliament, opponents of the Housing levy and National Assembly
Minority leader Opiyo Wandayi had raised concerns that the law was being rushed
through and sought more time for members to give their views due to the many
amendments proposed by various members. His calls were not heeded by the
majority side when it was passed.
Nyamira Senator Okongo Omogeni had proposed the amendments pushed
by the opposition that sought to have the deductions capped at Sh2,500 while
the affordable housing levy to be paid at the rate of 1.5 per cent of the net
salary of an employer or of an employee.
Omogeni unsuccessfully sought to have the affordable housing levy
based on net salary of an employee or any income received or accrued that is
not a salary in what he said was aimed at ensuring it was fair to majority of
Kenyans.
He wanted the Treasury Cabinet Secretary to exempt from payment of
the levy any person who enters into a subsisting mortgage that is not
contemplated under the Act. He was also of the view that any person residing in
a rural area is in possession of a certificate of title registered in their
name be considered.
Conditional
grant
The Nyamira Senator sought to have any person engaged in
agricultural farming or business activities whose annual turnover is less than
Sh288,000 yearly be exempted and sought to have all the funds collected through
the levy, allocated to county governments as a conditional grant.
The opposition also pushed to have exemptions for individuals aged
50 and above and are engaged in informal business activities as well as any
person with less than five years remaining to statutory retirement at the time
of the enactment of the Act.
Stay Informed, Stay
Empowered: Download the Standard ePaper App Now!
Omogeni sought to have counties entrusted with the management of
the fund and not the proposed Affordable Housing Fund Board since development
functions are a preserve of county governments and if boards were to undertake
this function then it would be in conflict with provisions of the Constitution.
The senator argued that the provision to create a board to be in
charge of investment programmes on all housing projects in counties was in
conflict with Schedule Six of the Constitution which reserves housing and
development as a county function.
The numerous other presentations made by the public when lawmakers
visited 19 counties are now water under the bridge.
The new law assented to by the
President on Tuesday provides for the affordable housing levy
at the rate of 1.5 per cent of the gross income of a business or an individual
and a matching contribution of the same amount in the case of employers.
The law provides a mechanism to prevent double taxation by
exempting persons who pay the matching contribution from paying the levy on
their gross salary. It also provides affordable housing relief at 15 per
cent for employees who make contributions to the levy, other tax-related
incentives relate to the reduction of the turnover tax from 3 per cent to 1.5
per cent, to alleviate the tax burden for the informal sector.
“In compliance with the court decision, the law establishes a
Fund, into which the levy is payable and the Fund shall be managed by Affordable
Housing Board which shall be responsible for the management of monies raised
through the Housing Levy,” states the law.
The law also establishes accountability mechanisms including a
requirement that the board shall prepare a five–year investment programme and
an annual investment programme
The two investment programmes shall be approved by Cabinet and
consequently be tabled in Parliament as well as a guide for the allocation of
funds for implementation of the affordable housing programme.
The law provides for the role of county governments in matters
relating to affordable housing and provides for the establishment of the County
Affordable Housing Committees, which shall advise the governor on affordable
housing programmes within the county, develop a framework for attainment of
affordable housing in every county in consultation with the Board among other
functions.
There were fears that some well-connected individuals would snatch
up multiple houses, and to cure this, the law further provides for the eligibility
criteria and application procedure for an affordable housing unit to ensure
that each applicant accesses only one affordable housing unit one of the
eligibility requirements is that an applicant must submit copies of their
National Identity Card; their KRA Pin and a tax compliance certificate.
“The Bill also provides for prioritisation for slum residents in
the affordable housing projects through offering the residents of the
settlements first right of purchase of a unit in the project or resettling
them,” reads part of the new law.
For citizens who might not raise the requisite deposit, the
programme offers them a flexible financial arrangement catered for by the
provision that makes making voluntary savings with the Affordable Housing Fund
possible for the purposes of raising a deposit towards the allocation of an
affordable housing unit.
Incase a person is not allocated an affordable housing unit, the
law provides for the option of withdrawal of savings or applying to the
Affordable Housing Board for approval of issuance of an affordable mortgage to
develop a rural affordable housing unit.
To address the challenges of institutional housing, the new law
provides that the Affordable Housing Board may enter into an agreement with a
public institution for the development of institutional housing units.
The Affordable Housing law also addresses issues of employment,
support for local communities and internship opportunities for students.
It obligates the Board to ensure when it develops affordable
housing units, it uses locally available materials, labour is sourced from the
local communities, and students near affordable housing project
No comments:
Post a Comment