Ruto’s Bold Move: Housing Fund Deduction Cut to Unlock Billions Annually
Kuria Kimani, chairman of the Finance Committee of the National Assembly, estimated on June 13 that the administration of President William Ruto would collect Ksh83 billion annually in Housing Fund contributions.
After introducing the Finance Bill 2023 in the House of Representatives, the Molo representative revealed that the Treasury arrived at its estimates after reducing the mandatory contribution from 3% to 1.5%.
According to estimates, Kenyans will contribute Ksh7 billion per month and Ksh581 billion over seven years.
“Even after reducing the contribution to 1.5%, we will raise Ksh83 billion annually,” the lawmaker stated, adding that they also proposed removing the Ksh2,500 ceiling.
Kimani explained that they decided to reduce the contribution from 3% after several Kenyans voiced concerns regarding the Housing Fund proposal.
In addition, he emphasized that the government would still profit from the housing projects despite the decreased contributions.
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“There is a misconception that increasing the tax rate will increase revenue. People told us that if the 3% remained, they would have quit their jobs and started their businesses.
He added, “Collections have increased as a result of tax reduction proposals.”
Housing Principal Secretary Charles Hinga revealed that the government’s initial monthly revenue goal was Ksh9 billion. This would have equaled Ksh108 billion per year.
Following the revisions, Kenyans will contribute Ksh1.5%, and their employers will be required to contribute the same amount.
According to the government, the funds will be used to purchase houses constructed by investors across the country.
To reduce the cost of construction, the government offered free land to investors in exchange for a mortgage, with Kenyans occupying the homes.
Ruto’s Bold Move: Housing Fund Deduction Cut to Unlock Billions Annually
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