Pressure Mounts on Ruto: Unveiling 3 Proposed Changes in Housing Fund
With President William Ruto desiring to establish the Housing Fund as his legacy project. Members of Parliament considered the opinions of various stakeholders before Thursday, June 15’s budget reading.
Ruto has received severe criticism for drafting proposals that do not bode well with many Kenyans.
A Legal Framework
In response to the uproar. The National Assembly Finance Committee proposed on Friday, June 9. The enactment of a legal framework outlining how the government would collect the 3% salary deductions. Before the implementation of the Housing Fund.
Before the vote on the Finance Bill 2023, which will dictate how the budget will be financed, there will be a clear outline of how Ruto’s administration will utilize the funds.
Retraction of Employer Contribution
On the other hand, according to Housing Principal Secretary Charles Hinga, the Ruto administration has proposed two changes to the fund, including the non-withdrawal of employer contributions and the taxation of withdrawals.
In response to questions raised by Kenyans on social media, the PS stated that after seven years, contributors could withdraw both their salary deductions and those of their employers.
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“The employer portion may be withdrawn concurrently with the employee portion at the earlier of seven years or retirement,” Hinga, who has been the public face of the project, stated.
Taxation of Distributions
“Withdrawals after seven years are no longer taxable. It is a highly participatory process, Hinga explained, hoping that the modifications will quell the uproar.
Previously, it was suggested that employer contributions remain in the fund for 14 years.
Contributors were also to be taxed on withdrawals, with the government explaining that the tax was based on the fact that contributions were not taxed at the time of salary deduction.
However, the government indicated that those who transferred their contributions to the retirement plan would be exempt from taxation.
“The money is a saving, not a tax as originally proposed. If you had been able to earn the money, you would have paid tax on it. This means that you have not paid tax for seven years,” the PS stated at the time.
Notably, the proposals will be discussed by the committee, which will retreat over the weekend to discuss contentious clauses in the Finance Bill 2023, including proposals made during its hearings by various worker unions and employers.
Among the other noteworthy proposals under consideration is the reduction of the deduction from 3% to 2%.
If the Finance Bill 2023 is passed by the House of Commons, the Housing Fund will go into effect on July 1, 2023.
Pressure Mounts on Ruto: Unveiling 3 Proposed Changes in Housing Fund
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