The High Court in Nairobi has declared President William Ruto's legacy Housing Levy unconstitutional.
A three-judge bench, comprising Justices Lawrence Mugambi, Christine Meoli, and David Majanja, found the amendment to Section 84 of the Finance Act 2023, changing the Employment Act to introduce the Housing Levy, to be in violation of constitutional principles.
The ruling, delivered on Tuesday, highlighted the discriminatory nature of the levy, as it imposed taxes solely on salaried Kenyans, neglecting those working in the informal sector.
Judges Mugambi, Meoli, and Majanja articulated their concerns, stating, "The levy lacks a comprehensive legal framework and is irrational."
They further emphasized that the levy violated taxation principles, as outlined in the Finance Act 2023, by creating an unfair distinction between the formal and informal sectors, thus establishing unequal and inequitable principles.
The Housing Levy, a contentious financial initiative, was projected to amass substantial revenues for the government towards realising President Ruto's countrywide Affordable Housing agenda.
The estimated collections were as follows:
2023/24: Sh63.2 billion
2024/25: Sh70.0 billion
2025/26: Sh78.0 billion
However, this ambitious financial plan has been abruptly halted by the High Court's decision.
The judges not only declared the levy unconstitutional but also barred the government from collecting it, marking a significant setback for President Ruto's economic agenda.
Lawyer George Murungara, representing the interests opposed to the levy, has urged the judges to grant a 45-day stay as the government contemplates its next steps.
This temporary reprieve would provide the government with the opportunity to reassess its approach and navigate the complex legal landscape surrounding the Housing Levy.
As the legal battle unfolds, the decision by the High Court stands as a pivotal moment, raising questions about the constitutionality of financial measures that disproportionately burden specific segments of the population.
The court's verdict sends a clear message about the importance of adherence to constitutional principles in the formulation and implementation of fiscal policies, shaping the trajectory of economic governance in Kenya.