William Ruto, the president of Kenya, has signed a contentious measure into law, allowing the government to keep collecting a housing charge equal to 1.5% of an employee’s monthly salary.
Although the levy’s implementation has drawn criticism from a wide range of sources, its goal is to finance the building of affordable housing for low-income individuals.
Many in the public and those in opposition have voiced their displeasure with the tax, seeing it as just one more tax among many others.
Legal obstacles had already prevented the bill from becoming law, with a judge stopping deductions because there was insufficient legal support. Last Monday, members of Parliament changed and approved the bill in spite of protests from opposition politicians.
The tax was first proposed in President Ruto’s agenda for the 2022 election. It is a component of a larger financial bill that was passed in June of last year, along with a doubling of the fuel sales tax. A higher health insurance premium is also scheduled to be implemented shortly.
The administration argues that increasing tax receipts is necessary to reduce the budget deficit and pay for necessary public services.
Since last July, the government has been withholding the 1.5% housing charge from employees’ pay. But in the face of widespread outrage, one activist successfully sued the government, claiming that it had unfairly targeted Kenyans employed in the formal sector and receiving a regular monthly pay.
The new law now extends the tax to additional workers and mandates that non-salaried Kenyans working in the informal sector pay the levy in order to meet the concerns brought up by the court.
In addition, the new law creates the Affordable Housing Fund, whose purpose is to oversee the funds the government would receive from the levy.
According to the authorities, the money that would have been paid if the plan hadn’t been suspended won’t be included in the deduction retroactively.
President Ruto wants to generate over 600,000 jobs annually and build 200,000 affordable housing units.