The labour court has temporarily suspended the deduction of 1.5% of employees’ salaries towards the Housing Fund Levy, until May 20, 2019 when a case filed by the Consumers Federation of Kenya (COFEK) is heard.
In its suit, COFEK argues that the Housing Fund levy is illegal and will lead to unjustified over-taxation to employees.
COFEK also said that imposing the housing levy on employees is not only “unreasonable” but also an infringement of their rights.
“It is COFEK’s position that the housing levy does not guarantee that all contributors under the scheme would get houses after investing their money. The Housing Fund Levy will compel employees in private and public sector to invest in housing which may not be a priority to their individual needs thus infringing their constitutional right of utilizing their earning according to their wishes.”
“The Housing Fund Levy is irrational because it does not factor the fact that some employees in private and public sector enjoy reasonable housing allowances and are members of home ownership schemes as part of their employment,’’ COFEK further stated.
EMPLOYEES TO PAY HOUSING TAX FROM MAY 2019
The government had on Tuesday gazetted a public notice announcing that the Housing Fund Levy, which is aimed to fund president Uhuru Kenyatta’s Big 4 Agenda on affordable housing, has been affected and employers will from 9, 2019 be required to remit 3 percent of each employees pay to the tax man.
Both the employer and the employee will each contribute 1.5 per cent of the employees’ monthly basic salary.
This was despite a pending case in court over the housing levy filed by the Federation of Kenyan Employees (FKE).