Win for workers as court declares Housing Levy unconstitutional

By , K24 Digital
On Tue, 28 Nov, 2023 12:16 | 2 mins read
High Court declines to suspend order for eviction of Njiru residents
Court gavel. PHOTO/Pexels

It's a big win for the workers after the High Court declared the Housing Levy unconstitutional.

In a judgement on Tuesday, November 28, 2023, Justices David Majanja, Christine Meoli and Lawrence Mugambi declared the housing levy null and void saying it is discriminatory as it imposes the levy on a section of the Kenyan population.

Housing levy according to the judges only targets those in formal employment leaving out those in the informal sector.

"We find hold that the enactment of Housing Levy must be supported with a rational explanation. We also find that the government failed to provide an explanation for the imposition of the levy. Further, the imposition of the levy on salaried employees and not those in informal employment is discriminatory and therefore, unconstitutional," the judges ruled.

The three-judge bench ruled that the Finance Act 2023 amendment to Section 84 of the Finance Act amending the Employment Act by introducing the Housing Levy is unconstitutional.

The judges further held that the levy lacks a comprehensive legal framework and is irrational.

"The levy violates the principles of taxation and as contained in the Finance Act 2023 is discriminatory and unfair for making a distinction between formal and informal sector thus creating unequal and inequitable principles and it is unconstitutional," the court has ruled

The judgement also bars the Kenya Revenue Authority (KRA) and the treasury from collecting the housing levies.

In their 167-page judgement, the judges found that Finance Act, 2023 is a Money Bill and the concurrence of both Speakers of the National Assembly and Senate was not required.

"In view of the foregoing, we are satisfied that, applying the peel and substance test, the Finance Bill 2023 is a money bill; however, it contains matters that are extraneous to a money bill and are unconstitutional," Justice Mugambi ruled.


“The asserted procedural flow allegedly arising from mode of compliance with the requirement regarding the estimate of revenue in the budget process is without foundation and is rejected."

The petitioners among them Busia Senator Okiya Omtatah, Azimio la Umoja and LSK had argued that both Speakers should have considered whether the Bill concerned counties and if so, whether it was a special or ordinary Bill and resolved the questions before passage.

Justice Meoli however ruled that the public participation conducted by the National Assembly was sufficient.

"Having considered the relevant facts and records and bearing in mind that the Finance Bill is time-bound legislation, we are satisfied that the public participation process conducted by the National Assembly was sufficient," Meoli ruled.

Further, the judges ruled it is wrong to argue that amendment of section 2 of the Finance Act on Income Tax Act- to impose taxes on entertainment interferes with the function of the county governments.

The court holds that the amendment does not affect the functions of the county governments.

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