Treasury CS Henry Rotich Admits to Error in Budget
Treasury Cabinet Secretary (CS) Henry Rotich has admitted to an error in the budget under the newly introduced National Housing Development Fund (NHDF).
In the Finance Bill, the CS had indicated that employees will now be deducted an additional 1 percent from their gross salary towards the NHDF scheme.
On Tuesday, however, Rotich clarified that there was an error as the deduction was supposed to be made at 0.5 percent and not 1 percent as earlier indicated.
[caption caption="Treasury CS Henry Rotich arriving in Parliament for budget reading"][/caption]
Rotich noted that this was a "typographical mistake" which had also stipulated a 1 percent contribution by the employer and a maximum of Ksh5,000 towards the housing kitty.
"The right rate is the one in the Budget statement. The error will be dealt with in Parliament, where we will harmonise what is in the Bill and what is in the Budget speech," the CS indicated.
The CS further revealed that the Ministry of Housing had proposed a 5 percent pay gross salary cut which "the Treasury thought was too high."
The changes that the Treasury intends to make to the Employment Act will see employees earning Ksh100,000 contribute Ksh500 every month to the fund while those earning Ksh1 million and above will contribute a maximum of Ksh5,000.
The payroll levy will help the government deliver the envisioned half a million affordable housing units in five years as part of Jubilee's Big 4 Agenda.
The Treasury further introduced amendments to the Central Bank of Kenya Act paving way for the establishment of state-backed Kenya Mortgage Refinancing Company (KMRC).
[caption caption="Highrise Estate in Kibera, an government housing initiative"][/caption]
KMRC is set to address the demand side of the housing market by offering liquidity to the mortgage industry with CS Rotich noting that those contributing to the fund will have priority over non-contributors in accessing the completed housing units.
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