Win for Gov't as High Court okays controversial housing levy

Kenya's High Court ruled on Tuesday that a controversial housing levy introduced last year as part of measures to try to shore up public finances was lawful.

The verdict means the government of President William Ruto can continue with the scheme, after a previous court ruling had declared it illegal in November 2023.

The 1.5 per cent levy on the salaries of all taxpaying Kenyans, to be matched by employers, was signed into law in June last year to fund an affordable housing programme, but faced multiple legal challenges.

"It is our finding that the levy is properly in place and in accordance with the Constitution," said Lady Justice Josephine Mongare, delivering the verdict of the three-member panel on Tuesday.

The levy was imposed as part of legislation that raised taxes on a wide range of items, adding to the hardship of Kenyans already hit by high inflation.

The Finance Act 2023 aimed to raise more than $2.1 billion to help service Kenya's huge $78 billion public debt.

But anger over the tax hikes and rising prices, particularly for basics such as food and fuel, led to a series of sometimes deadly protests against Ruto's government last year.

Similar demonstrations led largely by Gen-Z Kenyans also erupted earlier this year over the Finance Act 2024, which contained another round of unpopular tax increases.

Ruto has defended the housing fund, saying it will construct homes for the poor, create employment and reduce public borrowing.