Court Declares Ruto's Housing Levy Unconstitutional

A three-judge bench has declared that the Housing Levy introduced in the Finance Act is unconstitutional.

The 3-judge bench that consists of Justices David Majanja, Christine Meoli and Lawrence Mugambi delivered the ruling on Tuesday, November 28.

It ruled that the Finance Act 2023 amendment to Section 84 of the Finance Act amending the Employment Act introducing the Housing Levy is unconstitutional, adding that the levy had lacked a comprehensive legal framework and is irrational.

"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.

An illustration of the Affordable Housing Programme by Boma Yangu Initiative under the National Housing Corporation. /BOMA YANGU KENYA

The levy was accused of violating the principles of taxation and as contained in the Finance Act 2023 is discriminatory and unfair for making a distinction between the formal and informal sectors thus creating unequal and inequitable principles.

"We find hold that the enactment of housing levy must be supported with a rational explanation. We also find that the government failed to provide an explanation for the imposition of the levy. Further, the imposition of the levy on salaried employees and not those in informal employment is discriminatory and therefore, unconstitutional," the judges ruled.

In their 167-page judgement, the judges found that Finance Act, 2023 is a Money Bill and the concurrence of both Speakers of the National Assembly and Senate was not required.

The petitioners among them Busia Senator Okiya Omtatah, Azimio la Umoja and LSK had argued that both Speakers should have considered whether the Bill concerned counties and if so, whether it was a special or ordinary Bill and resolved the questions before passage.

Justice Meoli however ruled that the public participation conducted by the National Assembly was sufficient.

"Having considered the relevant facts and records and bearing in mind that the Finance Bill is time-bound legislation, we are satisfied that the public participation process conducted by the National Assembly was sufficient," Meoli ruled.

The ruling effectively bars President William Ruto's government from deducting funds from salaries towards the Housing Levy.