National Assembly Finance Committee Chairperson Kimani Kuria has clarified that the 1.5 per cent Housing Levy will not be used as a deposit to purchase houses under the Affordable Housing Programme.
Speaking during a public engagement of the Housing Bill in Baringo County on Tuesday, the Molo MP acknowledged that many people are under the false impression that salary deductions would be used as a deposit for the houses.
Kuria added that Kenyans who pay the 1.5 per cent will still be required to pay the set deposit for houses built under the programme spearheaded by President William Ruto.
While expounding his point, he cited instances where the government collects taxes to construct roads and railways under Public-Private Partnership (PPP) models, however, Kenyans still have to pay to use the infrastructure.
"The 1.5 per cent is a levy. However, if you want to benefit from the housing programme, you will have to pay 10 per cent of the house price. The 1.5 per cent levy is not part of the 10 per cent deposit.
"For example, we all pay PAYE which can be used to build the Standard Gauge Railway (SGR), but after completing it, you will have to pay to use it," he explained.
On the other hand, he also explained that the 1.5 per cent monthly deductions were being collected as a levy to safeguard its use.
"The 1.5 per cent goes to that programme to reinforce it so that the money is not used to pay for loans or do other things," he stated.
The government has been deducting the 1.5 per cent levy from employed Kenyans since the enactment of the Finance Act, 2023.
The deductions were later challenged in court and declared unconstitutional given that only a section of Kenyans were making contributions to the programme.
As an alternative, the government, through the Affordable Housing Bill 2023 is proposing to expand contributors into the scheme.
In the new proposals, Kenyans with salaries and those with income (informal sector) will make 1.5 per cent deductions towards the programme.
