Attorney General Justin Muturi has cautioned the Kenya Revenue Authority (KRA) against continuing with the salary deductions to support the Affordable Housing Agenda.
In a letter directed to KRA Commissioner-General Humphrey Wattanga, Muturi explained that there is no legal basis supporting salary deductions to fund the Affordable Housing project.
The former Speaker of the National Assembly made it clear that the deductions were declared unconstitutional and KRA's continued deductions were against the court's directive.
"The upshot of this is that there is no legal basis on which the housing levy as provided in section 84 of the Finance Act can be implemented,” Muturi stated.
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“Therefore, our considered opinion is that as of the date of delivery of the ruling of the Court of Appeal i.e. on January 26, 2024, there is no legal provision that enables the collection and administration of the housing levy.”
The letter was copied to Treasury principal secretary Chris Kiptoo and his Housing and Urban Development counterpart Charles Hinga and Solicitor-General Shadrack Mose.
A three-judge bench had last year ruled in favour of petitions filed before the high court challenging section 84 of the Finance Act 2023, on grounds that the levy was discriminatory and a direct violation of Article 10 of the constitution of Kenya.
The Finance Bill 2023 was assented to by President William Ruto on June 26, 2023, paving the way for deductions.
However, after the court ruling KRA wrote to the office of the Attorney General on February 12, 2024, seeking to understand the government's position on the controversial levy.
In response, he advised the taxman to cease collecting the levies. If KRA heeds to AG's advice it would be a relief for over 3.2 million Kenyans in formal employment who have been paying the contentious housing levy.
But the relief would be shortlived as the Kenya Kwanza administration is at an advanced stage of addressing the contentious issues in the Bill.
