Piece by: EMMANUEL WANJALA

11 June 2023

• Omtatah argues that the mandatory tax scheme encroaches on the right to independently allocate one’s resources based on priorities and preferences.

• The human rights defender further holds that the proposed formula of allocating houses does not guarantee a house to any person contributing to the Housing Fund.

Rights defender and Busia Senator Okiya Omtatah moved to court to challenge the enactment of the Finance Bill 2023 saying it contains threats to the Constitution.

While citing provisions of Article 22, 165(3) (d) and 258 of the Constitution, he says whereas no illegalities have been committed at this juncture, the courts have jurisdiction to entertain a petition that the provisions in a Bill, if enacted, would contravene the Constitution.

"A party does not have to wait until a right or fundamental freedom has been violated, or for a violation of the Constitution to occur, before approaching the Court," the law says.

Omtatah drafted the petition together with Eliud Matindi, Michael Otieno, Benson Otieno and Blair Oigoro. He filed the consolidated petition on Friday, June 2 at the High Court in Milimani, Nairobi.

Treasury CS Njuguna Ndugu, Attorney General Justin Muturi and the National Assembly are listed as respondents. KRA Commissioner General has been listed as an interested party.

What's the issue with the proposed Housing Fund?

Among the grounds on which Omtatah wants the Finance Bill 2023 found incompatible with the supreme law is that the proposed amendment provides for a mandatory deduction of three per cent of an employee's salary but it does not define who an employee is for purposes of benefitting from the levy.

"It is not clear, for example, if expatriates and persons temporarily working in the country will be subject to the levy considering they may not intend to set up residence in the country."

Omtatah argues that the mandatory tax scheme encroaches on the right to independently allocate one's resources based on priorities and individual needs and preferences like location, type of house and when to own it.

He says the government’s intention to forcibly deduct money from employees' basic pay to facilitate house ownership is unjust and morally offensive as it imposes a one-size-fits-all approach.

This, he says, threatens the right to freedom of association safeguarded by Article 36(2) as it will force people to join a savings vehicle or a Sacco of sorts.

"The proposed approach is coercive and limits options which individuals have in choosing their housing plans, or how to use their property," he states.

The lawmaker points out that Legal Notice No. 238 of December 17, 2018, allows people to voluntarily join an affordable housing scheme.

The MP further holds that the proposed formula of allocating houses does not guarantee a house to any person contributing to the Housing Fund.

"Unless there is a hidden poly where some of the contributors will be scammed," he says.

Further, Omtatah explains, if an employee were to remit the maximum monthly amount of Sh5,000 for the minimum saving period of seven years, total accrued savings would amount to only Sh420,000.

"There is no way that Sh420,000 can be used to finance the purchase of a home under the affordable housing scheme, given that the houses will be permanent structures or even flats."

The government’s Boma Yangu platform shows that a one-bedroom apartment at Pangani Affordable Housing Project, for instance, starts from Sh1 million, Sh2.5 million for a two-bedroom and Sh9 million for three bedroom house.

One must register on the Boma Yangu platform although this does not guarantee the allocation of a house even with a consistent monthly contribution of three per cent to the proposed Housing Fund.

Omtatah further argues that the Bill, if made law, is discriminatory. He says out of an approximate population of 50 million Kenyans, only about three million would be liable to contribute to the proposed mandatory deductions.

He says this contravenes Article 201(b)(i) of the Constitution which requires fairness in the sharing of the country's tax burden.

The legislator adds that the ceiling of Sh5,000 monthly deduction is oppressive to low-income earners whose three per cent is equal to or less than that amount.

Further, he says that employers are already under a legal obligation vide Section 31 of the Employment Act, 2007 to provide accommodation to their employees or to pay them house allowance for rent.

"For completeness, clarity and the avoidance of doubt, section 31 of the Act, on housing, states categorically that: An employer shall at all times, at his own expense, provide reasonable housing accommodation for each of his employees either at or near to the place of employment, or shall pay to the employee such sufficient sum, as rent, in addition to the wages or salary of the employee, as will enable the employee to obtain reasonable accommodation."

Omtatah further avers that the mandatory three per cent deduction on basic salaries will reduce workers’ purchasing power and increase business operating costs for employers.

He says the levy will also interfere with the net salaries of judges, members of constitutional commissions and holders of independent offices in contravention of Articles 160(4) and 250(8) of the Constitution which forbids interference with the salaries of those State officers.

Finally, the outspoken senator says the Bill threatens to violate Article 206 of the Constitution, which places an obligation on the government to deposit all the money it raises in the Consolidated Fund and not any other fund.