MPs To Reduce Ruto's 3% Housing Levy, Postpone Its Implementation

"Thanks, H.E. for listening to Kenyans on the tax bill proposal with levy coming down from 3% to 1.5%, Kenyans are happy," the MP posted on Twitter complete with a photo of himself, Ruto and other top government officials.

"The next battlefront is KPLC power bills. They have doubled confront the power Purchase Agreements head on."

His post was endorsed by ICT Chief Administrative Secretary (CAS) Dennis Itumbi, who quoted the tweet by saying "Feedback counts, President Ruto listens."

A section of Kenyans, including some who spoke to Viral Tea, have however called for the levy to be made voluntary to even employees or be done away with altogether.

The National Assembly's Finance and Planning Committee recommended that the housing levy be reduced to 1.5 per cent after collecting views from Kenyans who submitted their opinion regarding the Finance Bill 2023 which contains the proposed levy.

The Treasury had initially proposed a 3% deduction from every employee's salary, to be remitted to the National Housing Fund, with employers matching the amount.

Besides reducing the levy, the Committee led by Molo MP Kuria Kimani also proposed to scrap the requirement for employers to match an employee’s contribution.

It also recommended that the implementation date be pushed from June 15, 2023, to January 2024 to allow for sufficient time to enact appropriate laws and establish a robust framework for the Housing Fund.

“For an amendment that has a huge financial implication, you must find a way of recouping that implication. Otherwise, we are going to get a crisis where we have approved and we have not provided the resources to do so,” Kuria explained the reason behind the deferment.

Housing and Urban Development Principal Secretary (PS) Charles Hinga on Tuesday, June 6 revealed that the government was willing to make adjustments to the proposed levy, noting that the adjustments would be made to reflect the various views of stakeholders.

Hinga asked the committee to utilise its powers and make the necessary changes to the Bill coming after two weeks of public participation whereby Kenyans gave their views on the Finance Bill.

The PS maintained that the levy will be beneficial to employee contributors as the fund will not be subjected to tax on maturity, contrary to reports.

The housing levy has witnessed sharp criticism over what has been termed as discriminatory policies that appear to satisfy the rich more than the poor, the lack of clarity over its governance structure and the safety of the monies collected as well as the criteria that will be used to determine who qualifies to benefit from the affordable houses the government intends to build using the fund.