Housing levy: PS Hinga clarifies how Gov't will identify, tax non-salaried Kenyans

Housing and Urban Development Principal Secretary Charles Hinga has now come out to clarify how non-salaried Kenyans will pay the controversial housing levy.

This comes after President William Ruto on Tuesday assented the Affordable Housing Bill into law, paving the way for the implementation of the 1.5 percent monthly housing levy.

The move sparked questions regarding the mechanisms the State intends to employ in identifying non-salaried workers and Kenyans operating in the informal sector whose incomes will also be subject to deductions under the scheme.

Speaking on Citizen TV’s JKLive Show on Wednesday, PS Hinga clarified that the deductions will take effect immediately, noting that employers have until April 9 to submit their deductions to the Kenya Revenue Authority (KRA), although deductions from employees’ paychecks will commence this month.

Hinga likewise addressed the identification of non-salaried Kenyans under the scheme, highlighting two specific categories.

“The first category are the likes of lawyers, and architects who work in firms where they don't earn a salary so either there is a partnership fee or consultancy fee so what they do is submit their returns at the end of the year. So they get the gross income minus the expenditure plus whatever reliefs they get and they pay KRA,” said Hinga.

“They were excluded from the original levy we had recommended during the Finance Act and some of them earn a lot of money so the courts told us to work on that and they gave us 45 days to remedy the same and we did so by imposing 1.5 percent on their gross income.”

In terms of collecting contributions from informal sector workers such as mama mbogas and boda boda operators, the PS highlighted the existence of the Turnover Tax (TOT) already imposed on them by KRA.

“We looked at the 1.5 percent for guys in the informal sector who already have 3 percent turnover tax. So part of this bill sought to give them relief so that if you added 1.5 percent to the gross it was going to be 4.5 percent. What the State has done is to forego the 1.5 percent for the informal but they still have to remit it towards the levy,” said Hinga.

He further emphasized that the 1.5% levy is mandatory for all, even if some individuals may not aspire to own a home under the housing scheme, highlighting that compliance with the levy is a prerequisite for benefiting from the housing program.

"The boda boda guys still have a responsibility to pay even if they don't want to own a house. Everybody has a responsibility to pay. The deductions will take effect immediately for non-salaried workers as well,” he added.

Charles Hinga: We need to distinguish the ability to collect (which is KRA’s responsibility) and the responsibility to pay. The fact that KRA may not be able to collect from everybody does not take away the responsibility to pay. What the state has done is to forego the 1.5% for… pic.twitter.com/vJ2Rp1Bgbb— Citizen TV Kenya (@citizentvkenya) March 20, 2024