The High Court has ruled that the housing levy proposed in the Finance Act 2023 is unconstitutional and unlawful.
The levy would have deducted 1.5% from employees’ salaries to fund the government’s affordable housing agenda.
A three-judge bench comprising Justices David Majanja, Christine Meoli, and Lawrence Mugambi delivered the ruling on Tuesday, following a petition by Busia Senator Okiya Omtatah and six others.
The petitioners challenged the legality and constitutionality of the Finance Act 2023, which was passed by the National Assembly without the concurrence of the Senate.
The judges found that the housing levy violated Article 10 of the constitution, which requires public participation, good governance, and social justice in policymaking.
They also found that the levy was discriminatory and irrational, as it targeted only formal employees and excluded other income earners.
“That levy against persons in formal employment with the exclusion of other non-formal employment without justification, discriminatory, irrational, arbitrary, and in violation of Articles 27, 201 of the Constitution,” Justice Majanja said.
“An order is granted prohibiting the respondent from collecting/ charging or otherwise charging on Affordable Housing Act on the basis of section 84 of the Finance Act and all prayers on the consolidated petition not specifically granted,” Judge Majanja ruled.
They further found that it was unlawful for the Cabinet Secretary of Lands to authorize the Kenya Revenue Authority (KRA) to collect the levy, as this was not within his mandate.
The court quashed the amendment to Section 84 of the Finance Act 2023, which introduced the housing levy, and declared it null and void.
The bench also issued a permanent injunction, restraining the government from implementing or enforcing the levy.
The three-judge bench was appointed by Chief Justice Martha Koome and presided over by Majanja.
