Court Hands Blow To Kenyans Demanding Refunds From Ruto Housing Levy

It means that the government will keep the funds already collected under the Housing Levy.

Court Hands Blow To Kenyans Demanding Refunds From Ruto Housing Levy
Principal Secretary, State Department for Housing and Urban Development, Charles Hinga, during the press briefing on the housing agenda at State House on May 24, 2023. /TWITTER.HUSSEIN MOHAMED

A three-judge bench has granted a plea sought by the government which sought a 45-day conservatory order regarding the Housing Levy which was earlier declared unconstitutional.

The bench consisting of Justices David Majanja, Christine Meoli and Lawrence Mugambi granted the government the 45-day period, meaning the conservatory orders are in force until January 10, 2024.

"An order of stay is hereby issued today pending the filing of a formal application for conservatory orders in the court of Appeal and these orders of stay shall remain in force until January 10, 2024," Justice David Majanja ruled. 

It means that the government will keep the funds already collected under the Housing Levy as well as continue with the deductions.

Houses in the Kings Serenity affordable houses project in Kajiado County commissioned by President William Ruto on October 18, 2022. /STATE HOUSE KENYA

The government lawyers requested 45-day stay orders to make necessary amendments to the Housing Levy through the National Assembly in a bid to make it constitutional again.

Through lawyer George Murugara, the government warned of serious consequences should the judges decline to grant them the plea.

"These are operations that are going to be affected including what date is the effective cessation of the collection of the levy. Is it from today or the time the Act was enacted? Tomorrow, there will be an avalanche of Kenyans going to KRA asking for a refund. They're not given their money because there is a procedure that has to be followed. They will be in court with contempt applications, so this is a real danger facing everyone in government who must comply with this order," the lawyer stated.

"This is the reason why there must be a refund, lest there may be a refund, it cannot be tomorrow. It has to be within a given period of time after systems are adjusted, advice is given and appropriate measures are given. I don't agree with the submission given that the law cannot be rectified, that we leave to Parliament. If it has its means to pass it, well and good."

Immediately after the ruling that nullified the Housing Levy, petitioners as well as Kenyans had demanded that the government should refund the money it had unlawfully deducted from salaried Kenyans, something which was contested by government lawyers.

The Housing Levy was one of the sections declared null and void in the Finance Act, with the judges revealing 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 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.

President William Ruto signs Finance Bill 2023 into Law at State House, Nairobi on Monday, June 26, 2023. /PCS