Molo MP Kuria Kimani, who chairs the National Assembly Finance Committee, has admitted to the inadequacy of the proposed Housing Bill seeking to bolster President William Ruto's Affordable Housing project.
Speaking during an interview on Citizen TV, Kimani admitted that the law was ambiguous and did not narrow down on what kind of income for unemployed Kenyans was targeted for the levy.
He further concurred with the Court of Appeal ruling's conclusion that without involving the non-salaried in the levy, it would be discriminatory.
"As a legislator, I respect the interpretive arm of Government. (According to the court ruling on levy) the housing levy was discriminatory because it was only targeting the employed and not the unemployed," he explained.
"The Housing Levy lacked a legislative framework because every levy in this country that is collected actually has an act of Parliament that backs it. In my personal view, if the contribution has to be non-discriminatory, the fund has to be contributed by those who are salaried and those who are not."
He argued that whereas the bill was clear on the 1.5 per cent deductions for the salaried, the self-employed and individuals with other sources of income were not covered.
According to Section 4 of the Bill, "The levy shall be at the rate of 1.5 per cent of the gross salary of an employee or the gross income of a person received or accrued that is not subject to the (housing levy deducted from the salaried)"
Kuria, however, explained that the ongoing public participation exercise was aimed at clarifying the anomaly, to specify the type of income covered.
"There is a cure to make sure that the levy is not just a contribution by those who are salaried but also the non-employed. The problem with this law is that when we talk about gross income, is it rental income? Is it turnover? Is it self-employed income? What kind of income is it? Salary is defined but the other income is not," he added.
"Every income for all tax purposes has to be specific. You either talk about salary income, rental income, or gross turnover as per the Corporate Tax Act. We agree that that is missing and that is what these public hearings are about and what this joint committee hopes to cure."
The proposal also raised concerns across different cadres of participants including the the Real Estate Development and Finance Association (REDFA) Kenya which told the committee that the government should adopt alternative development approaches.
“The government should refrain from directly engaging in unit construction to mitigate potential citizen losses and avoid potential financial risks through government-led projects," the group argued.
The Institute of Certified Public Accountants of Kenya (ICPAK), on the other hand, argued that the proposed imposition of a Housing Levy on personal income was tantamount to double taxation and against international best practices. They proposed that Parliament should set aside funds for housing and not through the payroll.
On Friday, the Court of Appeal termed the deductions unconstitutional and ordered the state to halt them.
