Kenyans will breathe a sigh of relief if the National Assembly adopts recommendations from its Finance and Planning Committee to slash housing levy.
The committee, which winded up a weekly-long report writing on Sunday, June 11, recommended the housing levy be reduced from 3 per cent to 1.5 per cent.
Apart from the reduction, the committee led by Molo MP Kuria Kimani also made changes with respect to remittance and rollout of the proposed deductions.
In the Finance Bill 2023, the Treasury had proposed that every employee be deducted 3 per cent of their salary remitted to the Housing Fund with the employer matching the amount.
In the amendments, not only was the amount reduced to 1.5 per cent but also employers were recused from matching the remittances.
Initially, the Treasury had proposed that the deductions kick in on Thursday, June 15, but the Finance Committee proposed that the decision be deferred to January 2024.
“For an amendment that has a huge financial implication, you must find a way of recouping that implication.
“Otherwise, we are going to get a crisis where we have approved and we have not provided the resources to do so,” Kuria explained the reason behind the deferment.
The Molo MP explained that the delayed rollout of the levy would give the government ample time to enact proper laws and framework in relation to the Finance Housing Fund.
While the committee offered a reprieve in relation to the housing levy, it maintained the proposed 16 per cent Value Added Tax (VAT) on fuel.
President William Ruto, in an earlier interview on Sunday, May 14, explained that the increased levy was crucial for his development agenda, especially on transport infrastructure.
“If I have to complete these roads, I need money. Everywhere I go, Kenyans tell me they need roads,” the President defended his decision to double fuel VAT.
National Assembly is expected to debate the Finance Bill on Tuesday, June 13, two days before Treasury presents the 2023/2024 financial year budget.
