Three-judge bench says the levy is not anchored by a corresponding legal framework, does not show how it will be administered once collected and does not also show how the public will know some of its beneficiaries or the criteria used to determine the beneficiaries.
The High Court has declared the housing levy fund introduced by the government through the Finance Act of 2023 illegal and unconstitutional.
The court, while delivering its ruling on the Finance Act of 2023 on Tuesday, said that the fund was conceived and implemented by the government through unconstitutional means and went against the principles of fairness and equity.
Justices Lawrence Mugambi, David Majanja and Christine Meoli in their ruling also argued that the fund was opaque, lacked the necessary legal framework and failed to demonstrate how the public would benefit from it.
The judges further stated that the proposed levy was also not anchored by a corresponding legal framework, did not show how it will be administered once collected and does not also show how the public will know some of its beneficiaries or the criteria used to determine the beneficiaries.
“We find that the introduction of the housing levy amendment to Section 84 lacks a legal framework in violation of Article 10 of the Constitution,” the judges said.
The court also argued that according to all the corresponding laws in the country, all monies collected in government must be paid through the consolidated fund unless otherwise stated by an Act of Parliament. The housing levy, therefore, the judges said, cannot be paid to a fund unless there is a legal framework connecting it to the fund.
The judges also faulted the decision by the Kenya Revenue Authority to collect the fund, arguing that the collection of the housing levy fund was not under the purview of the Kenya Revenue Authority.
“An order is granted prohibiting the respondents from collecting, charging or otherwise the charge known as the affordable housing levy fund on the basis of Section 84,” the court ruled.
In their ruling, the judges also argued that by targeting the employed formal workers in the collection of the levy, the government had failed to employ the principle of equal justice, adding that the move in itself was discriminatory and also amounted to double taxation.
They stated that the government had instead opted for a path of easier resistance, when every Kenyan should be made to bear their fair share of taxation.
“The introduction of that levy against the persons in formal employment to the exclusion of other non-informal earners without justification of discriminatory, irrational and arbitrary and in violation of Articles 27 of the Constitution,” the judges ruled.
The court also declared Sections 76 to 78 of the Finance Act amending sections 7 of the Roads Board Act, Section 87 amending section 8 of the Unclaimed Assets Act, Sections 88 and 89 repealing Section 29 of the Statutory Instruments Act unconstitutional, null and void.
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