Court suspends 1.5pc Housing Fund Levy after COFEK case

Written By: Ben Troy Njue/Micheal Njuguna
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The high Court has temporarily suspended the government’s decision to implement the Housing Fund levy until the matter is heard and determined.

Consumers Federation of Kenya (Cofek) in its suit filed before the court claims that the levy is illegal and will lead to over-taxation.

Justice Maurine Onyango ordered the levy suspended temporary and the suit be enjoined with one filed by central organization of trade union (COTU) and Federation of Kenya Employers (FKE).

Cofek while objection the move in a suit filed before High court argued that there were more pressing issues in the country like health, food security and unemployment that need more attention than the levy.

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It claims new levy will not guarantee houses for those who remit.

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Cofek further says the levy may lead to unemployment as many employers may opt to reduce their workers.

Federation of Kenya Employers had also objected the implementation of the levy.

“The Federation of Kenya Employers (FKE) attended Court on the 8th of April 2019 for the further mention of this case and obtained an extension of the Court Orders suspending the implementation of the Housing Levy upto the 20th of May 2019 when the case will come up again for mention for further directions from the Court on the Hearing and determination of this case.” said FKE CEO, Jacqueline Mugo.

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The case will be mentioned on May 20, 2019.

The government was to start deducting the mandatory 1.5 per cent housing levy from all employees’ monthly basic salary effective this month.

In an advert in Tuesday’s local dailies, the government has instructed employers to remit the levy with other statutory levies by 9th of every succeeding month.

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Under the scheme, both the employer and employee shall each contribute 1.5 per cent of the monthly basic salary.

However, the sum of the total monthly contributions shall not exceed 5,000 shillings.

The government says voluntary contribution may also be made to the scheme at a minimum of 200 shillings per month. The deduction became law by the enactment of the Finance Act, 2018 relating to housing fund levy.

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