The Supreme Court declined to temporarily suspend parts of the Affordable Housing Act, including the collection of the housing tax, saying the public interest favored allowing the law to run until the petitions were decided.
A three-judge panel said laws enacted by parliament have a presumption of constitutionality and the court can only stop them if there is a risk of them being violated.
Six petitions challenging various provisions of the Affordable Housing Act of 2023 were filed and consolidated before Chief Justice Martha Koume appointed Justices Olga Siwe, John Shigeti and Josephine Mungari to determine the cases.
“We therefore find that the petitioners have failed to demonstrate that the impugned orders pose a danger to life or limb or threaten the Bill of Rights to justify the orders sought. We are not convinced that the petition will be void if the orders sought are not granted,” the judges said.
The justices said they had no doubt that the affordable housing tax had generated a great deal of public interest amid conflicting arguments about its constitutionality.
The petitioners, including Magari Jikini, had alleged that since the fund’s board was not in place and there was no clarity on the collector, the money would be vulnerable to theft and misappropriation in violation of Section 10(2) of the Constitution, which enshrines the principles of national values, good governance, integrity, transparency and accountability.
They also pointed out that the mandate of the Commissioner General of the Kenya Revenue Authority is limited to the affairs of the Authority and not the collection of fees.
The court was also told that the housing tax was imposed at 1.5 per cent without a study explaining how the fund would work, yet no money should be collected from the public without a spending line and a fully functional fund being created as required by law.
The government defended the law on the grounds that any law passed by Parliament has a presumption of constitutionality.
Parliament also noted that the Act provides the legal framework for the collection of fees and that the collection of fees is not uncommon in Kenya. It cited examples such as the road maintenance levy and the petroleum levy as similar initiatives.
President William Ruto signed the Affordable Housing Bill 2023 into law in March 2024, paving the way for the resumption of the tax deduction, which had been earlier halted by the court.
1.5 percent of the employees’ total monthly wages is deducted, and the employer agrees to deduct it.
Under the new law, Kenyans working in the informal sector and others who do not earn a monthly salary will pay 1.5% of their gross monthly income to fund the pet housing project launched by President Ruto.
Dr. Jikeni, one of the petitioners, wants the court to declare that there was insufficient public participation before the law was passed.
He also considers that Articles 3 and 4 of the law, which provide for the imposition of the tax, are unconstitutional because they constitute a threat to social and economic rights and are in conflict with the Constitution.
The petitioners also sought to have the government’s financial management regulation (Kenya Slum Upgrading, Low Cost Housing and Infrastructure Fund) repealed in its entirety and to force the state to return the amounts already collected from Kenyans.
“Articles 10, 21(3) and 201 require that tax measures be socially just, adequate, equitable and progressive and must not disproportionately shift the tax burden to the poor and marginalized,” one of the petitioners argued.
The petitioners will urge the court to compel the state to conduct a human rights impact assessment of proposed tax measures to fund any government programme and issue a permanent injunction barring the Ruto administration from imposing any tax without such assessment.
The Minister of Lands, the National Treasury, the Attorney General and the National Assembly opposed the case.
The judges noted that the petitioners were asking the court to suspend some parts of the law on demand without hearing the petitions on substance.
They said that in principle there is a general presumption that laws enacted by Parliament are constitutional until proven otherwise and such a strict order cannot be issued on request.
The judges said hearing the case would be a priority.
