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Court blocks housing levy as new taxes bite

Some of those who voted for William Ruto report buyers' remorse as economic conditions worsen

Kenyans are bracing themselves for two years of budgetary austerity but the scale of the hit to payslips will be delayed after the Supreme Court blocked the Finance Bill, which set out several new taxes including a controversial housing levy (AC Vol 64 No 13, The new age of austerity).

Increases to the top rate of income tax from 30% to 35% and a doubling of VAT on fuel are now in force but the compulsory deduction of 3% of every employee's monthly wages towards a National Housing Development Fund has been stayed after the Supreme Court decided that Chief Justice Martha Koome should hear the case in full (AC 7/6/23, Ruto's housing levy is triggering mass dissent).

The government says the levy, which is capped at 5,000 shillings ($35.89) for both employees and employers, will be used to build affordable houses for low-income people.

Yet the case rests on the constitutional requirement for the government to consult the county administrations on money bills, and on whether the constitution permits the creation of an earmarked housing levy.

Opposition leader Raila Odinga's protests against the Ruto government's economic management and the cost of living crisis have not forced concessions from the President, they show the pain felt by Kenyans, particularly the lower middle class voters who shifted to Ruto's camp in last August's elections.

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