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Employers who fail to remit housing levy deductions will be liable to fines of up to three per cent of the unpaid amount.

The fines are contained in a new bill that seeks to regularise the housing levy deductions after the High Court ruled that the tax was unconstitutional.

The Affordable Housing Bill that was tabled in the National Assembly yesterday provides for how the levies will be managed, gives criteria on how interested persons will own units and establishes an Affordable Housing Fund to be managed by a board.

“Where an amount of the levy remains unpaid after the date when it becomes due and payable by a person liable to remit the amount, a penalty equal to three per cent of the unpaid amount shall be due to payable for each month or part thereof that the amount remains unpaid and shall be summarily recovered as a civil debt from the person liable to remit the amount,” the proposed bill says.

Gross income

To address issues raised by the courts regarding discrimination by targeting only salaried Kenyans, the government has expanded the tax bracket to include incomes other than monthly salaries.

“The levy shall be at the rate of one point five per cent of the gross salary of an employer or the gross income of a person received or accrued which is not subject to the levy,” it adds.

Yesterday, Leader of Majority Kimani Ichung’wah introduced the bill that seeks to legalise the 1.5 per cent deduction by both employees and employers.

The employer will be required to deduct and remit the levies to the collector not later than the ninth working day after the end of the month in which the gross salary was due or gross income was received or accrued.

Reads the bill: “The objects of this act shall be to give effect to article 43 (1) (b) of the Constitution on the right to accessible and adequate housing. Impose a levy to facilitate the provision of affordable housing and provide a legal framework for the implementation of the affordable housing programmes and projects.”

The tabling of the bill comes after the High Court declared the housing levy unconstitutional.

In a ruling on November 28, judges David Majanja, Christine Meoli and Lawrence Mugambi ruled that levy was discriminatory since it only targets those in formal employment.

Ownership criteria

The bench, however, granted stay orders on the implementation of the judgement until January 10, 2024.

To speed up the process of enactment of the bill before the lapse of 45 days that was granted by the High Court, the MPs resolved to reduce the publication period of the bill from 14 days to three days.

The publication period is the period between the date a Bill is published in the Kenya Gazette and when it is due for First Reading. At the end of the publication period, the Bill is deemed to have matured for First Reading.

On the criteria of how interested persons can own a home, the bill provides that a person who qualifies for a unit must be a Kenyan citizen who is at least 18 years old and holds a Kenyan identity card.

A person who meets the criteria and is interested in owning a unit will be required to make an application to the relevant agency.

According to the bill, an application made shall be accompanied by proof of a requisite deposit approved by the relevant agency of at least ten per cent of the value of the housing unit being applied for, a copy of ID and a copy of the Kenya Revenue Authority Personal Identification number certificate.

“In determining the allocation of an affordable housing unit under this section, the relevant agency shall give preference to marginalised persons, vulnerable groups, youth, women and persons with disabilities.”

A person who desires to be considered for a loan towards the purchase of a housing unit shall make an application to the respective agency.

The bill, which will be subjected to public participation, also seeks to establish the affordable Housing Fund.

The fund shall be managed by the affordable housing board which shall source and allocate funds to various bodies.

The board will consist of a non-executive chairperson, Principal Secretaries National Treasury and State department relating to affordable housing, three persons appointed by the Cabinet Secretary of whom one be from the council of governors, another from Central Organisation of Trade Union (COTU) and the other will be from the Federation of Kenya Employers.

The other members are three persons who will not be public servants and will comprise qualifications in environment, Finance or law.

The board will also be at liberty to hire a chief Executive officer who will have a right to vote at a meeting of the board and also hire a secretariat.