COTU Secretary General Francis Atwoli won a petition against the government's plan to impose value added tax on employees salaries.

On Wednesday, the Employment and Labor Court suspended the plan by the government after the Cotu boss cited lack of public participation.

Justice Hellen Wasilwa gave the order after she cited the suit as urgent.

Burden

Her order stated: “That the matter is extremely urgent as the application seeks to stop the irregular imposition of 1.5 % VAT on salaries of the employees as there was no public participation in the Amendment Act 2007 through section 86 of the Finance Act, 2018.”

COTU Secretary General Francis Atwoli

According to Cotu, the implementation of the housing tax would cause an increase in different prices levels and the burden would be felt by the poor citizens.

Cotu's lawyer Okweh Achiando told the court that taxing the housing levy on the basic salary of employees would have infringe on the right to fair remuneration.

"The petitioner is aggrieved that its unconstitutional and legally invalid to subject Kenyans to double taxation by imposing the 1.5% housing development levy on basic salaries," Achiando stated.

Raising Funds

Treasury was looking to raise Ksh57 billion annually from workers to finance the proposed National Housing Development Fund (NHDF).

The contribution was to be capped at Ksh5,000 with employers set to match the contribution.

National Housing Cooperation houses

President Uhuru Kenyatta’s proposal would have seen an employee earning Ksh100,000 contribute Ksh1,500 every month to the fund.