Lawmakers have called a meeting with litigants, civil society and experts over a proposed law to anchor the contentious housing levy.
The National Assembly seeks to engage the petitioners and experts to give their views on the state-backed Affordable Housing Bill, 2023.
President William Ruto’s Kenya Kwanza administration has proposed the law to navigate the legal hurdles in the housing plan.
On Friday, an appeals court declined to grant the government more time to collect the housing levy through the Finance Act, 2023.
This followed an appeal by the government challenging the decision of the High Court, which declared the levy unconstitutional.
A three-judge bench of the High Court said the levy should be anchored on a substantive law – not amendments to the Employment Act.
“The introduction of the housing levy through amendment of the Employment Act by Section 84 of the Finance Act, 2023 lacks a comprehensive legal framework,” judges David Majanja, Christine Meoli and Lawrence Mugambi said.
They also held that “the imposition of the housing levy against persons in formal employment to the exclusion of other non-formal income earners to support the national housing policy is without justification unfair, discriminatory, irrational and arbitrary.”
The court issued an order “prohibiting the respondents from charging, levying or in any way collecting tax, otherwise known as the ‘Affordable Housing Levy’ based on the aforesaid Section 84 of Finance Act, 2023.”
Appeal court judges Lydia Achode, John Mativo and Paul Gachoka on Friday declined to lift orders of the High Court to allow the state to continue collecting the levy.
“Public interests tilt in favour of awaiting the determination of the issues raised in the intended appeals,” the judges said, dealing a blow to President Ruto’s legacy plan.
To navigate the hurdle, Kenya Kwanza sponsored the new affordable housing law which provides that employed Kenyans will pay 1.5 per cent of their salary.
Their employers will match the same to go towards the housing kitty.
Those in default would be penalised at three per cent of the unpaid amount.
The National Assembly Finance Committee chaired by Molo MP Kuria Kimani wants a session with Busia Senator Okiya Omtatah – the lead petitioner in the case - and the lawyers of co-petitioners.
Parliament has also invited the Law Society of Kenya, Kenya Association of Manufacturers, Federation of Kenya Employers, Cotu, property developers, Pricewaterhouse Coopers, Real Estate Trust, Deloitte, among others to give their views on the proposed law.
Clerk of the National Assembly Samuel Njoroge told the Star that the meeting is to accord the litigants an opportunity to give their input on the proposed law.
“We want to allow them to have their say on the bill so that they don’t wait until we pass then challenge it in court,” Njoroge said.
He said that several of the petitioners had as of Sunday indicated they would attend the meeting.
“We want to incorporate their views. Some have submitted written memoranda, whereas some have indicated they will come,” Njoroge said.
But there is a hurdle in the face of the concerns that informed a case that was filed in court ahead of the call for public hearings.
Some of the litigants, notably Omtatah, expressed reservations about attending Monday's meeting.
He told the Star that he was invited but would not attend as the rules of inviting a senator to appear before a National Assembly sitting were not followed.
“The question is, was the invitation in accordance with the law? I cannot appear before the National Assembly in the manner they have suggested,” he said.
“If they want my appearance, they must get the Senate to move a motion to approve this in a vote,” the lawmaker said, indicating he had informed the National Assembly clerk of the same.
Omtatah hinted that the proposed legislation may also be up for a court challenge, as it has numerous shortcomings that he did not specify.
“It has serious violations that will result into litigations against it if not dealt with,” the Busia senator said.
Narok, Embu, Kisii, Kirinyaga, Homa Bay, Kiambu, Vihiga, Machakos, Uasin Gishu and Turkana residents had a chance to give their voice on the contentious levy.
The joint team of Finance and Housing committees of the National Assembly also met residents of Baringo, Nairobi, Wajir, Nakuru, Nyandarua, Lamu, Tana River, Kilifi and Mombasa.
The High Court stopped the levy for lack of a legal framework linking it to the existing National Housing Development Fund.
The other question was whether the Kenya Revenue Authority was empowered by law to do the collections.
Even as the hearings proceed, the grand question by experts is whether the new bill has adequately addressed the concerns.
Edward Dande, CEO Cyton Investments, holds the view that the new legislation is worse than the Finance Act.
“If you thought the Affordable Housing Levy issues raised by the High Court about the Finance Act were problematic, go read the draft Affordable Housing Bill,” he said.
For Dande, the bill has confirmed that the levy will not be administered as per the Housing Act.
He also reasoned that the bill doesn’t clarify who the beneficiaries are. “Anyone with a 10 per cent deposit can benefit. It doesn’t matter whether you have a house or not.”
Dande further observed that the “legality of KRA collecting the tax has not been addressed”, adding that the fund “is merely a conduit to pass funds to other entities.
“The allocation bypasses Parliament entirely. Woe unto you who is not adequately represented in the Cabinet,” the Cyton boss said.
Parliament, he pointed out, is also bound to be bypassed in the scenario where the powers of the board rest in one office.
Dande pointed out that at no point does the bill refer to public land, which is at the core of the housing strategy.
“It is not clear whether the fund is to build houses, to fund purchasers or to off-take from developers. It remains amorphous,” he said.
Dande said the “mangled-up structure [the government is creating in the bill] offends the principles of transparency, openness and hence is unconstitutional”.