The 2.75 per cent statutory contribution to the Social Health Insurance Fund (SHIF) is well within the legal stipulations of Kenyan law, the government has assured Kenyans.
Through a statement released on Monday, June 23, Health Cabinet Secretary Aden Duale assured the public that the deduction was legally in force and recognised as a deductible under the Tax Laws (Amendment) Act, 2024.
He further added that the contribution was in line with Universal Health Coverage (UHC) laws, which include the Social Health Insurance Act, the Digital Health Act, and the Primary Health Care Act.
“All of which are designed to uphold equality, financial protection, and access to quality health services for all Kenyans,” Duale noted of the laws.
Duale’s assurances came after the High Court on Monday declined to hear a case challenging the mandatory 2.75 per cent SHIF deductions, citing that some of the issues raised in the case were already before other courts.
In his decision, Justice Chacha Mwita struck out a petition filed by four doctors who contested the legality and fairness of the SHIF contribution system.
In their petition, the doctors argued that the deductions violated multiple constitutional guidelines, specifically taking issue with the mandatory registration of every Kenyan and the 2.75 per cent deduction.
They alleged the deductions were violations of privacy, equality, and property rights. A central argument in the petition was that post-tax income is protected property and cannot be subjected to new deductions without direct benefit or legal justification.
When it was first introduced, many argued that the deduction amounted to double taxation, thus informing the basis of their argument.
Under Kenyan law, double taxation refers to a situation where one’s income is taxed twice by the same tax authority or by two different jurisdictions. The Income Tax Act outlaws the taxation of the same income twice, based on the principles of fairness and equity.
However, the court declined to engage with the substantive issues, determining that the case was sub judice, meaning it was already before another judge.
The judge cited two ongoing proceedings, including one filed by Busia Senator Okiyah Omtatah, which addressed the same legal questions, including the constitutionality of the Social Health Insurance Act (SHIA).
Justice Mwita acknowledged that some of the matters may not be fully addressed in the two other cases but reiterated that allowing the petition to proceed while the other cases were still pending would risk conflicting rulings.
The SHIF pay structure involved a mandatory deduction of 2.75 per cent of one’s gross income or household income. The minimum payment currently stands at Ksh300 per month.
For salaried employees, the deduction is automatically taken from the monthly gross salary by the employer, who then remits it to the Social Health Authority. This is to be done by the ninth day of the following month.
