The Law Society of Kenya has moved to court challenging the affordable housing levy that is in the impugned Finance Act 2023.
In an application filed in court on Friday, they want the court to stop the housing levy deductions implemented by the state arguing that it threatens the social economic interest of Kenyans.
Through lawyer Noel Okwach, LSK says that unless the court stops it, the state will implement the impugned adjusted tax rate to the detriment of many businesses.
The court of appeal lifted the order of the high court that had suspended the Finance Act and immediately thereafter the state issues a notice that they would backdate the deduction from June’s Salary.
However, LSK have challenged the deductions saying that implementing it will cripple the economy and lower the rate of employment.
“Due to the heavy burden to be shouldered by both the employers and employees, the enactment of this impugned law will further lower the rate of 6 employment in a country which is already grappling with low rates of employment which is against the principle of social justice as envisaged under Article 10 of the Constitution,” reads court papers.
It is their further argument that the mandatory provisions are discriminatory against persons employed in the formal sector as they will be required to make mandatory contributions for the benefit of those in the informal sector.
“This is by no means a way of administering a tax as there is no corresponding duty nor responsibility on persons in the informal subsector to make mandatory contributions to this housing fund,” reads court papers.
LSK also says that the deductions of the housing levy will amount to double taxation where the gross income of an employee will be subjected to a second tax for the same purpose as the goal is to provide housing for employees.
“The finance act, 2023 fails the constitutional test of purpose and effect as it is ignorant of the fact that some kenyans in the formal sector are owners of homes therefore the scheme will be of no benefit to them,” reads court papers.
Their case has been consolidated with that of Busia Senator Okiya Omtatah and will now be heard on September 13.
