Ruto Explains Why 3% Salary Cuts Are A Must For Kenyans
On Thursday, May 11, the President affirmed that the affordable housing plan was one of the critical campaign promises he had to fulfil.
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President William Ruto on Sunday, May 21 defended the proposal for employees to contribute three per cent of their monthly basic salary to the affordable housing plan yet again, explaining why Kenyans must contribute the levy despite not being interested in the affordable housing scheme.
Speaking during a Sunday Service at Isiolo Boys High School, Ruto answered the contentious question many Kenyans have been asking regarding the levy; why the contribution will be mandatory even for Kenyans who are not interested in owning homes through the affordable housing program?
The Head of State argued that the program would result in the creation of 1 million jobs a year in the construction industry, meaning it will be up to Kenyans to address the high rate of unemployment.
Houses in the Kings Serenity affordable houses project in Kajiado County commissioned by President William Ruto on October 18, 2022. /STATE HOUSE KENYA
"Some people are wondering who told me they want houses, and others are asking why I want to deduct their money. This country belongs to all of us regardless of being president, employed or jobless.
“It is our collective business as the people of Kenya to make sure that we work together for this nation and we must carry everybody along,” Ruto spoke.
He had reiterated his remarks 10 days ago at the groundbreaking of the Lapfund Bellevue Park Residence Project in Nairobi, whereby he revealed that the contributions were for low-income earners to realise their dream of owning homes.
On Thursday, May 11, the President affirmed that the affordable housing plan was one of the critical campaign promises he had to fulfil.
The Head of State, in his attempts to allay fears across the country, argued that the three per cent deductions were not a tax but money he claimed belonged to Kenyans.
He added that other than the 3 per cent deductions from employees' salaries, the 3 per cent would also be reduced from the contributions made by employers.
"In the housing fund plan, employees are to remit 3 per cent every month, and the employers will give 3 per cent. The six per cent will be the employees' wealth.
"That money is yours and not tax, all that money belongs to the people. This is a programme that we cannot fail to do because it provided jobs for the millions of young people leaving our learning institutions," he added.
Cornered on the same during a joint media interview with journalists at State House on Sunday, May 14, the President stated that it was every Kenyan's business to help alleviate unemployment in the country.
“You don’t think it is your business to contribute to the employment of unemployed Kenyans?” Ruto questioned the journalists. “That is why the constitution gives me the power to tax," the president added.
The National Housing Fund is a government initiative aimed at providing affordable housing to Kenyans. The fund requires all employees to contribute 3 per cent of their monthly salary and every employee who contributes 3 per cent, to their employer will also contribute 3 per cent to the housing kitty.
State Department for Housing and Urban Development Principal Secretary, Charles Hinga termed the Housing Fund as like a national chama (savings group).
"We determined that in order for us to be able to provide those houses at those prices of Ksh5,000, Ksh10,000, Ksh15,000, we have got to do something that every Kenyan knows how to do. And that is a national chama," the PS said in a recent interview with Spice FM.
The highest-earning person contributing to the Housing Fund will only pay Ksh2,500 monthly, while the majority of Kenyans will pay Ksh1,000 to the fund. The aim of the fund is to raise Ksh9 billion per month, which will be used to start housing projects in the country.
After the construction of the houses, Kenyans will be able to own homes at an affordable price by paying a mortgage of 5 per cent. Those not interested in homeownership will be able to access their money after seven years.
The Finance Bill 2023 proposed amendments to the amendment of the Employment Act of 2007 to compel employers to contribute to the National Housing Development Fund for each of their employees.
The contributions made to the Fund will benefit employees in two ways, one of them being that employees who qualify for affordable housing can use their contributions to buy a house under the affordable housing scheme.
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