Housing levy evolves into tax only worker will pay

An Affordable Housing project in Bondeni, Nakuru County, on February 13, 2023. [Kipsang Joseph, Standard]

"The employer contributions will increase the cost of employment and therefore likely to lead to loss of job opportunities," the Kenya National Chamber of Commerce and Industry told the committee in its submissions on the Bill captured in the committee's report.

"In addition, employee contributions would lead to reduced net income in the face of a high inflation rate and high cost of living.

"Alternatively, it will be useful to define an employee for the purposes of this fund and exempt those already with houses...or make it a voluntary contribution."

The Kenya Private Sector Alliance (Kepsa) proposed the implementation of a voluntary contribution system starting January 2024, which should also be matched by the employer.

It added that structures should be in place before the government started collecting funds through the levy.

Ensures constitutionality

"This approach avoids any challenge to private property rights and ensures constitutionality. Regulations for the fund accountability should be developed with the Finance Bill," said Kepsa when it appeared before the committee.

The Trade Union Congress noted that the new levy will spell doom for the workers.

"This will be disastrous to households," said the congress in its submissions to the Finance Committee.

"Introduction of this new levy is irrational and reduces the disposable income available to an employee."

It proposed to make the fund optional until proper consultation and negotiation with workers' representatives is done.