Following the government’s directive to employers to deduct and remit 1.5percent from salaries for the Housing tax the Federation of Kenya Employers (FKE) has come out to oppose such a move.
Through a statement seen by Daily Active, FKE laments that the notice is against court orders that suspended the implementation of the Housing Levy up to the May 20, 2019 when the case will come up again for mention.
“The Federation of Kenya Employers (FKE) attended Court on April 8, 2019 for the further mention of this case and obtained an extension of the Court Orders suspending the implementation of the Housing Levy up to the 20th of May 2019 when the case will come up again for mention for further directions from the Court on the Hearing and determination of this case,” the statement reads.
Transport, Infrastructure, Housing and Urban Development Cabinet secretary James Macharia was earlier in January this year quoted saying the affordable housing project will be implemented after successful talks with workers’ union and employers.
“We had injunctions that halted the process but the parties have agreed to withdraw them so we are ready to proceed with the project,” Mr Macharia was quoted saying.
The 1.5 percent levy on salaries is expected to generate about Sh57 billion a year, from about 2.5 million salaried Kenyans, with additional revenue expected to come from voluntary contributors, who will be putting in a minimum of Sh200 into the fund per month.
Cotu filed an urgent application in December last year at the Employment and Labour Relations Court challenging the levy’s legality.
The government had earlier locked out the top earners from benefiting from homes or mortgages from the fund and instead offered to refund those earning above Sh100,000 their contributions plus interest after 15 years of contribution.
Contributors can use their savings as a deposit or security when negotiating for mortgages to buy the affordable houses, while low-income buyers can use the savings to access tenant purchase schemes that eventually leave them as owners.
Workers earning less than Sh50,000 will be offered homes under the tenant purchase scheme.
Those on gross pay in excess of Sh50,000 will be offered mortgages at seven per cent per annum and expected to repay their loans after 15 years.
However, FKE Director/CEO Jacqueline Mugo said: “The Gazette Notice is therefore unlawful and we shall keep you posted on any further developments.”