- They submitted heavily on issues of double taxation, public participation, judicial independence, discrimination under the Affordable Housing Act among other issues
- The senators argued that the affordable housing levy constituted double taxation particularly on individuals who have taken out mortgages prior to the Act
Image: FILE
The government has defended the creation of the Affordable Housing Act 2024, saying it was created to enable citizens access decent housing.
While the petitioners in a case have termed the Act that imposed a 1.5 per cent levy on incomes as 'a Ponzi scheme', the state said the rate was carefully negotiated.
Senior Counsel Prof Githu Muigai, Kiragu Kimani and Mahat Somane asked a three judge bench to allow the Act to remain operational and dismiss petitions filed by 22 senators led by Busia Senator Okiya Omtatah, Dr Benjamin Gikenyi and human rights defenders.
They submitted heavily on issues of double taxation, public participation, judicial independence, discrimination under the Affordable Housing Act among other issues.
The senators argued that the affordable housing levy constituted double taxation particularly on individuals who have taken out mortgages prior to the Act.
But the state was quick to dismiss this claim saying it cannot be substantiated.
They said mortgage is a credit facility advanced to a person wishing to purchase a house and is treated as a debt by the home owner.
"It is also not true that a majority of Kenyans are servicing mortgages as alleged by the petitioners," Githu said.
They maintained that the act introduced the levy to achieve a specific public purpose which is to raise funds that will ultimately be used to enable all citizens have access to decent affordable housing.
"The notion of double taxation is fundamentally flawed," the counsels said.
But the senators said the Act cannot be allowed to stand as the Acts legal framework has no clear roadmap on how people in the informal sectors will pay the levy which brings discrimination.
They told Justices John Chigiti, Olga Sewe and Josephine Mong'are that the act did not consider those already servicing mortgages, or have their own houses with a preferred style.
"Forcing people to get deducted to enable another person get a house, while the contributor is not benefiting is unconstitutional," said the senators.
They asked the courts to consider how other levies such as fuel and sugar operate.
"But when it comes to the housing levy, there is no clear roadmap on how people in the informal sectors will pay it which brings about discrimination," the petitioners argued.
In a rejoinder, Githu and team said the senators did not demonstrate the existence of any unfair discrimination brought about by the Act.
They said the levy extends beyond salaried employees to include persons who have other sources of income. On the issue of public participation, the state said there was direct participation through memoranda and submissions to the legislature by members if the public.
"There was also indirect participation through debate, amendments and proposals done by the members of legislature," they said.
On March 19, President William Ruto signed into law the Affordable Housing Bill, 2024, paving the way for the reinstatement of the contentious housing levy deductions.
The new legislation ropes in workers in the informal sector for the regulations to be in agreement with the High Court ruling that rendered it unconstitutional last year.
Under this new law, Kenyans will now be deducted 1.5 per cent of their gross monthly pay.
Judgement will be delivered on October 22.