The labour court has suspended the housing 1.5% housing tax levy that it had imposed on Kenyans as which was to commence at the end of April.
The court said that the tax will stay on hold until the matter is heard on May 20.
The government had On Tuesday announced that the housing levy fund has come to effect, for both employees and employers.
In a public notice published in the local dailies, the ministry of transport, infrastructure, housing, urban development and public works in conjunction with the Kenya Revenue Authority (KRA) said that both the employer and the employee shall each contribute 1.5 percent of the employee’s monthly basic salary.
“The employers are required to deduct and remit the levy together with other statutory levies from both the employer and the employee but the 9th of each succeeding month together with other payrol statutory deductions,” announced the government.
The first contribution was to be due by May 9, 2019.
In the notice, the government said that the fund shall be used to finance the affordable housing scheme under the Big 4 Agenda.
The benefits of contributions in respect of the employee shall include purchase of a home under the housing scheme, or in case of ineligibility the contribution can be transferred to a pension scheme or another person under the scheme.
In January, Transport CS James Macharia had said the first 2,000 housing units will be built on Nairobi’s Park Road.
Central Organization of Trade Unions (Cotu) had opposed the idea and even successfully petitioned against its implementation.
However, the suspension was lifted after the government reached an agreement with the Francis Atwoli led COTU
“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 said.
The tax scheme is expected to generate about Sh57 billion annually from about 2.5 million salaried Kenyans. Additional revenue is expected to come from voluntary contributors.