MPs must not legalise housing fund injustice
The divisive controversy over the proposed Housing Fund and related levy rages on. While the top leaders are convinced that it is an excellent idea, the ordinary Kenyans are not buying it.
While the leaders deny that it is a tax, their attempted explanations only confirm that it is, indeed, just that. The public resentment is understandable. The times are hard, with the cost of living spiralling, but Kenyans continue to be heavily taxed.
A case of when things change the more they become the same, perhaps. The levy to enable more Kenyans to own their own houses is morphing into something akin to the obnoxious colonial ‘hut tax’.
After contributing to the fund for seven years, there will be no refund to those who won’t get a house. They, therefore, risk losing their savings. And after the cap on deductions was removed, a flat rate of 1.5 per cent, down from three per cent, will be deducted from workers’ salaries with employers required to match the amount.
No freedom of choice
To rub salt into the wound, there will be no freedom of choice. Even those who already own homes must have their salaries slashed for it yet there is no guarantee of getting a house. The scheme is also discriminative: It is those in formal employment, who have a payslip, who will bear the brunt of the deductions, notwithstanding that the money collected will not be enough to purchase even a modest Sh3 million house.
Some top politicians, including senators, argue that it is about pooling resources as security so that developers can put up houses. But taxing employers for the programme is imposing a needless burden on them as they also struggle to stay afloat. The consequence is a freeze on job creation and pay raises.
As some experts have warned, there is a huge risk of the fund becoming a scandal of monumental proportions. Parliament, which is discussing the Finance Bill 2023, should not legalise an injustice.
Instead, the government should make mortgages more widely affordable and facilitate the construction industry. This is possible, for example, through tax waivers and concessions for private developers who source materials locally.
Boost the local industry without inflicting pain on the people.
