November 28, 2023.
NAIROBI, KENYA | A High Court in Kenya has declared the 1.5% housing levy, introduced in June as part of a finance law, unconstitutional. The ruling, announced on Tuesday, stated that the government had not provided a rational explanation for exclusively imposing the levy on formal sector workers, deeming it discriminatory and in violation of the constitution.
The finance law, which triggered protests in July due to its provisions, not only introduced the housing levy but also doubled fuel tax and increased the top income tax rate. The court’s decision marks a victory for opponents who argued that the law would further burden households already grappling with rising living costs.
The judges, Lawrence Mugambi, Christine Meoli, and David Majanja, emphasized that the levy’s introduction was discriminatory, targeting only salaried Kenyans while excluding those in the informal sector. “An order is granted prohibiting the respondent from collecting/charging on Affordable Housing Act on the basis of section 84 of the Finance Act,” declared Judge Majanja.
Government lawyers sought a 45-day stay of the order to decide whether to appeal or amend the law to address the court’s concerns. President William Ruto’s government has contended that higher taxes are necessary to stabilize government finances amid growing debt repayments and to expand access to housing.
The ruling highlights the judiciary’s commitment to upholding constitutional principles, as the judges delved into various sections of the finance law. While some sections, such as amendments to the VAT Act and the Excise Duty Act, were deemed constitutional, Section 84, introducing the housing levy, lacked a comprehensive legal framework, violating constitutional articles on national values and principles of governance.
Lawyer George Murungara, representing the government, requested the stay, allowing time for deliberation on the next steps. The court’s decision reverberates not only as a legal precedent but also as a testament to the judiciary’s role in safeguarding citizens from perceived discriminatory policies.
