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Court Orders: Continue Paying Contentious Housing Levy in January

Court Orders: Continue Paying Contentious Housing Levy in January

Employees and employers will be required to pay the contentious housing charge in January. This is after the Court of Appeal ruled that the status quo be maintained until the ruling is delivered on January 26th.

Following the government’s appeal against the High Court judgment, appeals justices Lydia Achode, John Mativo, and Mwaniki Gachoka extended the conservatory order, allowing the government to continue collecting house tax for this month.

Upon hearing the parties, it was decided that all the applications would be consolidated, stemming from the same judgment of the High Court dated 28th November 2023.

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Civil Application No. E577/2023 was designated as the lead file. The ruling on these consolidated applications is scheduled to be delivered on 26th January 2024. In the meantime, the status quo as of today will be maintained until the delivery of the ruling, as per court papers.

It was noted that the conservatory order issued by the High Court was set to expire on January 10th.

Ruto administration warned that suspending the 1.5% housing charge and other taxes imposed by the Finance Act of 2023 would cause a severe budgetary catastrophe and disarray in the country.

The announcement was made before the Court of Appeal by National Treasury Cabinet Secretary Njuguna Ndung’u and Attorney General Justin Muturi while seeking orders delaying enforcement of the High Court decision that declared the housing levy unlawful pending the outcome of their appeal.

Ndung’u and Muturi informed Justices Lydia Achode, John Mativo, and Mwaniki Gachoka that if the existing orders, which are set to expire on January 10, are not extended, the government will face a serious dilemma and a void in its ability to collect taxes to fund key projects and pay salaries.

The court also heard that if the judgment is implemented, several government officials and agencies, including the Kenya Revenue Authority and the Ministry of Housing, will be held in contempt of court for failing to refund the 1.5 percent housing levy, amounting to billions of shillings deducted from salaried workers.

ALSO READ: High Court Declares Ruto’s Housing Levy Unconstitutional

The AG and Treasury CS, through lawyers Githu Muigai, Kiragu Kimani, and Mahat Somane, argued there would be serious consequences if the judges denied the stay orders.

Githui stated that unless the court took measures to protect the Kenyan public, their appeal would be rendered nugatory. He emphasized that the potential consequences were unimaginable, pointing to the risk of a legal constitutional crisis and unprecedented chaos in the country’s history.

However, the petitioners, which included Busia Senator Okiya Omtatah, rejected the government’s explanation, claiming that continuing to execute the taxes that the court had decided were null and illegal violated the Constitution.

Yesterday, government lawyers urged the appellate judges to stay the High Court decision from November last year that declared certain sections of the Act, including the housing levy, Kenya Roads Board, and unclaimed assets, unconstitutional, null, and void until their appeal is heard and determined, claiming that Kenyans will not suffer any prejudice if they continue to pay the taxes.

Kimani told the court that if the orders, which are set to expire on January 10, are not extended, the collection of nearly Sh73 billion in taxes will be halted, as will the construction of 258,874 dwelling units across the country.

State Counsel Kimani informed the judges that the 120,000 jobs generated by the affordable housing project would be terminated if the order is allowed. He emphasized that if the appeal is unsuccessful, there should be a mechanism for reimbursing the funds to the affected taxpayers instead of asking them to rebate the taxes.

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He further warned the court that if the High Court’s decision is implemented, their appeal will be considered nugatory and academic exercise.

Somane informed the justices in his submissions that the high Court’s 45-day suspension decision was proper and in conformity with the law.

Kimani expressed concerns about the lack of a stay, stating that without it, the implementation of the judgment would render any appeal irrelevant. He warned that the absence of a stay would lead to significant confusion in the country.

Somane requested that the Court of Appeal defer the High Court’s decision declaring the levy unconstitutional in order to allow the legislature to correct the statute and the appeal.

On his part, National Assembly Speaker Moses Wetang’ula supported Ndung’u Muturi’s plea for stay orders to allow Parliament to address the housing levy crisis that began in December before MPs went on holiday.

Wetang’ula, through his lawyer George Murugara, told the judges that his appeal is arguable and vigorous, and that he intends to prove that the High Court erred when it declared unconstitutional sections 76 and 78 of the Kenya Roads Board Act, the Unclaimed Assets Act, the Statutory Instruments Act, and Section 84 of the Finance Act 2023, on which the housing levy is based.

He stated that Sections 88 and 89 of statutory instruments all deal with the three levels of government.

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Murugura emphasized that certain statutory instruments had implications for government entities involved in revenue collection, such as tribunals. He expressed concern that the failure to sustain these instruments could lead to the cessation or closure of some institutions.

Consequently, this could create a gap in the effective functioning of the government, adversely affecting its citizens.

National Technical Referral Hospital Regulations, Bomet University Regulations, Kenya Technical Trades College Regulations, Kisumu National Polytechnic Regulations, Eldoret National Polytechnic Regulations, Kenya Institute of Mass Communication Regulations are among them.

Kenya Revenue Authority, through lawyer Gaya Ochieng, sought the court to issue stay orders, claiming that if an application for housing levy return is filed, it will face jail time for contempt.

“If the orders are not granted, the KRA and the Ministry of Housing will be cited for contempt of court if any refund application is made.” “It is in the public interest and in good order that an order of stay be granted at this stage,” Ochieng requested.

The court heard that the KRA and the Ministry of Housing have a procedure in place to return the taxes that have already been collected.

Court Orders: Continue Paying Contentious Housing Levy in January

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