National Assembly Finance Committee chairperson, Kuria Kimani, on Tuesday, June 13, estimated that President William Ruto's administration would collect Ksh83 billion annually in Housing Fund contributions.
Speaking after tabling the Finance Bill 2023 in Parliament, the Molo MP revealed that the Treasury arrived at the estimations after the mandatory contribution was reduced from 3 per cent to 1.5 per cent.
From the estimations, Kenyans will contribute Ksh7 billion monthly and Ksh581 billion in seven years.
"Even after reducing the contribution to Ksh1.5 per cent, we will raise Ksh83 billion per year," the lawmaker stated, adding that they also proposed removing the Ksh2,500 cap.
Kimani explained that they chose to reduce the contribution from 3 per cent after several Kenyans raised concerns over the Housing Fund proposal.
He also underlined that the government would still make money for the housing projects with the reduced contributions.
"There is a wrong concept that if you increase the tax rate, you will collect more. People were telling us that if the 3 per cent stood, they would have rather left employment and started their businesses.
"Proposals on reducing tax have seen improved collection," he added.
Initially, the government targeted raising Ksh9 billion monthly, as Housing Principal Secretary Charles Hinga revealed. This would have translated to Ksh108 billion annually.
Following the revisions, Kenyans will part way with Ksh1.5 per cent, with their employers expected to match the employees' contributions.
According to the government, the money will be used to buy houses built by investors nationwide.
In reducing the cost of building, the government offered to give free land to the investors in a mortgage agreement with Kenyans taking up the homes.
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