Workers to lose their money in the controversial Housing Fund after being amended to mandatory tax
2 min read
No housing levy refunds in the revised President Ruto tax plan after changing the contribution to a mandatory tax
No housing levy refunds in the revised President Ruto tax plan after changing the contribution to a mandatory tax.
President William Ruto’s Housing Fund changed from the initial savings plan to a mandatory tax of 1.5%.
And now workers may lose their money in the controversial Housing Fund if Parliament approves a fresh proposal to scrap a clause requiring the State to offer refunds to contributors who miss out on affordable homes after seven years.
This is after the National Assembly Committee on Finance recommended changes to the kitty to allow equal contributions by Kenyans, which effectively means that the money will not be refunded after it is collected.
The committee chair and Molo MP Kimani Kuria said the changes are pegged at ensuring that the levy goes to building affordable houses.
“Yes, it is a tax and that is what Kenyans told us. We have ringfenced it to make sure that it is going into building affordable houses,” said Kuria, speaking to Citizen TV.
Kuria noted that the committee removed the initial proposal allowing contributors to withdraw the fund after seven years.
The lawmaker revealed that the levy will enable beneficiaries to buy affordable houses around their area of choice.
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“The contributions you make into the fund become a rebate when you aggregate to own a house. The previous provision was not clear and this will benefit anybody who has contributed towards the fund,” he said.
He said the scheme will be implemented by the state department for housing. The committee further recommended the removal of the KSh 2,500 cap on every employer and employee, which amounted to KSh 5,000.
In the new amendments, the employer and the employee will contribute 1.5% of the basic monthly salary.
Earlier, Ruto aid the Housing Fund is a saving contributed by 3% of the basic salary plus an additional 3% from the employer.
The head of state said the plan will start with over 700,000 civil servants as it extends to employees in the formal and non-formal sectors.
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