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The government expressed willingness to make adjustments to the proposed National Housing Levy, as outlined in the Finance Bill.
Principal Secretary for Housing and Urban Development Charles Hinga told the National Assembly Finance Committee on Tuesday, June 6, to utilize its powers and incorporate necessary modifications into the bill.
This comes after two weeks of public participation, where Kenyans offered their views on the Finance Bill 2023.
The PS maintained that the levy will benefit contributors, as the funds will not be subjected to taxation upon maturity contrary to reports.
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Housing PS Charles Hinga speaks during a media briefing at State House, Nairobi on May 24, 2023
The PS was pressed to clarify whether the 3% deduction from an employee's salary could be considered a tax.
Some legislators argued that such mandatory contributions disproportionately burden the country's poorest citizens to support urban dwellers.
Criticism of the housing levy
The proposed housing levy has faced criticism for alleged discriminatory policies that favour the affluent, lack of clarity surrounding its governance structure, concerns over the safety of collected funds, and uncertainties regarding the criteria for qualifying beneficiaries of affordable housing projects.
Another MP noted that before collecting funds from Kenyans, it is crucial to establish a solid foundation for the Housing Fund by building the necessary infrastructure.
Government cedes ground on changes
The PS implores the committee not to discard the entire Housing Levy proposal and instead, address the challenges and concerns raised.
READ: How Nairobi's slumlords rake in more cash than Runda, Muthaiga landlords
The Finance and National Planning Committee is scheduled to convene for a report-writing retreat, during which they will consider incorporating the stakeholders' views, particularly those of the Federation of Kenyan Employers (FKE).
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Housing PS Charles Hinga speaking during a media briefing at State House, Nairobi on May 24, 2023.jpg
The FKE had expressed concerns that the Housing Levy would lead to job cuts and proposed making the contribution voluntary.
Insider sources reveal that behind-the-scenes negotiations between the government and employers have led to the government's reconsideration, with the possibility of reducing the levy.