1.5 % Kenya Housing levy to Start on March
Employees in the formal sector could start getting a 1.5% monthly deduction on 1st March 2019. The 1.5% levy will go towards finance cheap housing as part of President Uhuru Kenyatta’s Big 4 Agenda. The levy was temporarily suspended following Central Organisation of Trade unions (COTU) lawsuit that disputed the Government failure to accommodate public participation before imposing the Levy under the Finance act, 2018 approve by the president in September last year. The trade union argued that the levy would force the employees to servitude; this resulted to huge public dissent. Justice Helen Wasilwa suspended the Levy, pending the hearing in January 21st 2019.
Transport, housing and Infrastructure Cabinet Secretary James Macharia on Tuesday 4th January 2019 said an agreement between the Government and COTU had been reached, ending the court injunctions and paving a way for the 1.5% Levy to become effective on 1st March. The levy will be deducted from employees’ basic salary and it will be submitted to National Housing Development Fund (NHDF).
This comes at a time when Cotu wants Housing principal secretary Charles Hinga to be held in contempt of violating the court order on levy suit lifted following the agreement. The trade union argues that Mr Hinga despite the knowledge of the existing court order proceed to invite applicants for Housing Fund Advisory Board.
CS Macharia confirmed that the construction of the cheap housing units will commence a few weeks after the start of 1st March deductions. “The project is now clear and will be in launched a few weeks. The first 2000 units will be built in Park Road Nairobi.”
The 1.5% tax levy is estimated to generate more than Sh 50 billions per year, from 2.5 million salaried workers. The government is also anticipating some financing from voluntary contributors and financing from donors.
To qualify as the benefactor of the cheap housing the ministry will establish a website that will allocate every individual an automated score on whether they fall under low cost housing bracket. You will be required to provide you financial statements including, M-Pesa statement, Bank statements and KRA pin. The workers who have made the contributions will qualify and will be give first priority to buy these houses.