Workers to Pay Housing Tax if Raila Wins Presidency

Azimio presidential candidate Raila Odinga has pledged to introduce a housing tax, if elected president in the Aug. 9 polls, as a strategy to ease the housing shortage in the country.

Mr Odinga says the levy will be used to finance the National Housing Development Fund, which will support the development of large-scale housing projects across the country.

If Mr Odinga succeeds, workers will part with 1.5% of their pay with a monthly maximum of Sh5,000 for high-income earners, with employers contributing a similar amount to the fund.

Fierce opposition

President Uhuru Kenyatta’s government introduced a similar levy in 2018, but the plan met fierce opposition from legislators, employers, and other stakeholders forcing the State to declare the levy a voluntary contribution.

The government was seeking to raise Sh57 billion annually from workers to finance the fund that would help it achieve its goal of delivering 500,000 affordable housing units in five years.

RELATED: Inside Kenya’s Sh1 Trillion Low-Cost Housing Project

However, on Aug. 29, 2018, lawmakers rejected the proposal saying it would cause a huge cost burden to companies while hurting Kenyan workers.

A few weeks later, President Kenyatta reinstated the tax proposing to have every worker pay “1.5% of the monthly basic salary”, up from the 0.5% that had been proposed by the Treasury.

This meant a worker earning Sh100,000 would contribute Sh1,500 every month to the fund – up to a maximum of Sh2,500 for individuals with salaries of Sh166,000 and above.

Contributions were scheduled to start on January 1, 2019.

Major setback

However, on Dec. 20, 2018, the scheme suffered a major legal setback after a court suspended the planned deduction of workers’ pay to fund the initiative.

The Employment and Labour Relations Court ruled in favour of a claim by the Central Organisation of Trade Unions (Cotu) that the levy should not be applied without proper discussions between workers and the government.

Cotu secretary-general Francis Atwoli had moved to court to challenge the housing levy on grounds that the public did not participate in its creation.

A year later on Dec. 12, 2019, President Kenyatta – citing court cases and resistance from employers and workers – ordered a revision of the law to make the contribution voluntary.

To avoid President Kenyatta’s predicament, Mr Odinga says he has engaged Cotu in a bid to encourage the organisation to support the housing levy.

“I’ve talked to the head of Cotu, Francis Atwoli, and he has assured me that they will cooperate with us – Azimio government – when we get into office,” Mr Odinga said on Wednesday during the ground-breaking of Makasembo Estate in Kisumu.

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