Housing Levy Deal: Salaries Slashed for Kenyan Workers
As a result of Wednesday night’s approval of the proposed Housing Levy deduction by Members of Parliament. Aalaried Kenyans are now preparing for a decrease in their take-home pay beginning in July.
In a vote that divided the House due to its contentious nature. 184 members voted in favor of the now uncapped 1.5% deduction. Matched by an employer contribution of 1.5%, while 72 members voted against the proposal.
The Finance Bill 2023 had initially proposed to introduce the Levy at a 3.0% deduction of an employee’s salary, which would be matched by the employer at a rate of 3.0%, but the National Assembly Finance and Planning Committee amended it to 1.5% after public participation concluded.
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Disputed portion
Clause 76 of the Finance Bill 2023 has been arguably the most contentious aspect of the Kenya Kwanza government’s first revenue-raising plan, with Finance and Planning Committee Chairperson Kimani Kuria indicating the government aims to collect Sh83 billion annually through a deduction that will be channeled to the Housing Development Fund.
“It is erroneous to believe that increasing the tax rate will result in greater tax revenue. Numerous individuals told us, “If you’re going to deduct 3%, I’d rather not work; I’d rather start my own business.” We sat down with Treasury and discussed their projections for collections at 3.0%, and we realized that even after lowering 3.0% to 1.5%, we will still collect Sh83 billion per year,” Mr. Kimani stated.
Members of Parliament also adopted on the floor of the house an amendment stipulating that funds collected through Housing Levy deductions would be ring-fenced exclusively for affordable housing projects to prevent any leakage for unintended purposes. Expected to begin with the July 2023 pay date.
Housing Levy Deal: Salaries Slashed for Kenyan Workers
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