Housing Levy: Here's what next after Court of Appeal suspends collection

The Court of Appeal has ordered the government to suspend the collection of the Affordable Housing Levy, pending the hearing and determination of the case.

This order is a major victory for Kenyan workers and a setback for the government's plans to fund affordable housing initiatives.

Introduced as part of the Finance Act of 2023, the tax aimed to fund affordable housing by imposing a 1.5% levy on Kenyan employees.

However, this move was met with legal challenges, culminating in the High Court's declaration of the levy as unconstitutional due to its discriminatory nature against payroll workers.

The levy targeted only a section of Kenyans, excluding those without formal employment.

Initially, the High Court had deemed the levy unconstitutional, raising concerns about the absence of a clear legal framework and pointing out its discriminatory impact.

However, the state requested a stay on this ruling, to allow the government to challenge the ruling in the Court of Appeal.

The High Court allowed the government to continue collecting the tax until January 10.

After the lapse of the period, the government went to the Court of Appeal seeking a further extension.

On January 26, the Court of Appeal, led by a three-judge bench, declined to issue the extension and ordered the government to suspend collection of the revenue.

The judges argued that if the extension was granted and the levy was later found unconstitutional, it would lead to complications in refunding the deducted monies.

This ruling halts the government's ability to collect the levy, marking a crucial moment in the legal battle over this contentious issue.

The judges have ordered four consolidated appeals to be heard promptly to resolve the issues raised.

"This is because if the stay sought is granted at this stage, should the appellate Court affirm the impugned decision, then some far-reaching decisions that will have been undertaken pursuant to the impugned laws may not be reversible.

"Public interest in our view tilts favour of in not granting the stay or the suspension sought. Public interest tilts in favour awaiting the determination of the issues raised in the intended appeals," the judges ruled.

This suggests that while the current decision is pivotal, the final outcome of the Housing Levy saga is yet to be determined.