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Housing levy refund scrapped as revised Finance Bill is tabled in Parliament

Kenyans will no longer get refunds if the amendments on the housing levy are passed

National Assembly Finance and Planning Committee Chairperson Kuria Kimani speaking in Parliament

The National Assembly Finance and Planning Committee has recommended amendments to the Finance Bill, 2023 affecting the housing fund contribution.

The key proposal is to convert the housing fund into a tax, leading to a significant change in the way funds are handled.

National Assembly Finance and Planning Committee Chairperson Kuria Kimani confirmed that under this amendment, the collected money will no longer be refunded to contributors.

Cognizant of this and objections raised by the shareholders, the committee agreed to amend the proposal on Housing Fund by making it a levy as opposed to a contribution so that the funds can be appropriated directly to fund the housing initiative under the Bottom-Up Economic Transformation Agenda,” he said.


Previously, the housing contribution, capped at a maximum of Sh2,500 and matched by employers, would go into a dedicated fund.

However, it will now be directly be collected by the government. The revised Finance Bill 2023 was officially tabled in the National Assembly on Tuesday, June 13.

The Finance Bill 2023 initially stated that contributors who were unable to secure houses would receive their money back, along with interest, within seven years.

However, the parliamentary committee has decided to reduce the contribution from the proposed 3.0 percent to 1.5 percent.


This reduced amount will now be collected as a tax by the Kenya Revenue Authority (KRA), alongside other levies.

While the conversion of the housing fund into a levy may yield benefits for the government's revenue collection, it has raised concerns among contributors.

Previously, individuals who were unable to secure housing within the stipulated time frame were entitled to receive their contributions back, with added interest.

However, under the proposed amendment, contributors will no longer have the option of refund.


Proponents of the amendment argue that by redirecting the funds directly to the government's accounts, it will be possible to allocate resources more efficiently towards housing projects.

This, in turn, could lead to an increase in the number of affordable housing options available to the public.

On the other hand, critics argue that removing the refund option may discourage some individuals from participating in the housing fund.

They contended that the seven-year timeframe for refund provided an added sense of security and incentivized people to contribute.


The reduced contribution rate of 1.5 percent aims to address this concern, but the shift to a tax may still deter potential contributors.


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