A High Court in Nairobi has declared the housing levy that was introduced by President William Ruto as unconstitutional.
Judges Lawrence Mugambi, Christine Meoli and David Majanja on Tuesday ruled that the introduction of the levy was discriminatory since it imposed taxes on salaried Kenyans alone and excluded those working in the informal sector.
"...That levy against persons in formal employment with the exclusion of other non-formal without justification, discriminatory, irrational, arbitrary and in violation of Articles 27, 201 of the constitution," Justice Majanja said.
The three-judge bench was appointed by Chief Justice Martha Koome and presided over by Majanja.
"An order is granted prohibiting the respondent from collecting/ charging or otherwise charging on Affordable Housing Act on the basis of section 84 of the Finance Act and all prayers on the consolidated petition not specifically granted," Judge Majanja ruled.
Delivering the court's decision, Majanja stated that they had looked through various sections of the act and where else some were constitutional, some were not.
Among the constitutional sections are Section 33 of the VAT act which introduces VAT on insurance compensation as it does not violate Article 40.
Article 40 is on the Protection of the right to property.
Majanja further added that Sections 30 to 38 of the Finance Act, which amend Sections 5, 8, 12, 17, 34, 43, first schedule, and second schedule of the VAT Act were not in violation of the constitution.
Section 48 of the Finance Act amending the Excise Duty Act was also not unlawful.
He, however, noted that they had found that the introduction of the housing levy amendment to Section 84 lacked a comprehensive legal framework in violation of Article 10, 201 of the Constitution.
Article 10 deals with the national values and principles of governance while Article 201 outlines the principles of public finance.
The three-judge bench declared that Section 76 to 78 of the Finance Act amending Section 7 of the Roads Board Act, Section 87 amending Section 28 of the Unclaimed Assets Act, 88 and 89 are unconstitutional and void.
It also found that Section 84 of the Finance Act violated several articles of the constitution.
Lawyer George Murungara has asked judges to grant a stay for 45 days as the government mulls the way forward.
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