Labour Court Suspends Housing Levy Following COFEK Suit

The Consumers Federation of Kenya (COFEK) on Wednesday filed a case with the labour court challenging the implementation of the 1.5 per cent housing levy by the government. This resulted in its suspension by Justice Maureen Onyango to allow for the consolidation of the current case with a previous suit filed by the Central Organisation of Trade Unions (COTU).

The organisation argues that the housing levy will bring about unjustified over-taxation of Kenyans when there are more pressing issues facing Kenyans such as the rising cost of living and drought.

In its application, COFEK states that it is unreasonable to compel citizens who will not secure a house to contribute towards house ownership by another person without corresponding benefits.

The organisation’s position is that the levy doesn’t guarantee that houses will be given to all the contributors after they invest their money. They also point out that the levy could lead to a rise in unemployment as employers may resort to downsizing their workforce to the detriment of the economy.

“The Housing Fund Levy will compel employees in private and public sector to invest in housing which may not be a priority to their individual needs thus infringing their constitutional right of utilizing their earning according to their earning according to their wishes,’’ reads court papers.

They also argue that the fund will be discriminatory to many including those who already own houses, retirees, low income earners, etc.

“The Housing Fund Levy is irrational because it does not factor the fact that some employees in private and public sector enjoy reasonable housing allowances and are members of home ownership schemes as part of their employment,’’ says COFEK.

In addition, the public questions the necessity of those who own houses or have mortgage plans to make the contributions.

Similarly, the Federation of Kenya Employers has also opposed the plan to effect the deduction from all employees in the public and private sectors.

The case is set for mentioning with that filed by COTU and FKF on May 20, 2019.