The High Court has ruled that the Housing Levy is unconstitutional, null and void.
A 3-judge bench consisting of Justice Lawrence Mugambi, Justice Christine Meoli, and Justice David Majanja made the ruling on Tuesday, November 28.
The three-judge bench found that the Finance Act 2023 amendment to Section 84 of the Finance Act amending the Employment Act introducing the Housing Levy is illegal.
In their rulings, the three judges directed the State to stop collecting the housing levy from Kenyans.
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"The levy lacks a comprehensive legal framework and is irrational. The levy violates the principles of taxation & as contained in the Finance Act 2023 is discriminatory and unfair for making a distinction between the formal & informal sectors thus creating unequal and inequitable principles and it is unconstitutional," the judges ruled.
As such, the High Court has now dealt a blow to President William Ruto's housing agenda.
The High Court also found the Housing levy to be opaque in the absence of a legal framework to support the levy.
They also ruled that the notice by KRA to collect the levy lacked legal basis.
Justice Majanja in reading the ruling stated that it was discriminatory to tax salaried Kenyans only.
"The levy against persons in formal employment to the exclusion of other non-formal income earners without justification is discriminatory, irrational, arbitrary, and against the constitution," Justice Majanja ruled.
The introduction of the housing levy saw Kenyans deduct 1.5 percent of their salaries and their employers were forced to match it with an equal amount deducted.
