Kenyan’s fury with the government over the planned three per cent housing tax suspended on Wednesday spilled over to the weekend, fouling the Easter mood.
The affordable housing project, tied to President Uhuru Kenyatta’s Big Four agenda, plans to put up 500,000 houses before 2022.
The project, estimated to cost over Sh1.3 trillion, seeks to build Kenyans one, two and three bedroom apartments in Nairobi, Mombasa, Kisumu, Nakuru and Eldoret towns in three years.
But it has been dogged by controversy and suffered a blow after Labour Court judge Maureen Onyango suspended the tax to allow the consolidation of the current case by Consumers Federation of Kenya (Cofek) with another earlier filed by Cotu.
The ministry of Transport, Infrastructure, Housing and Urban Development and the Kenya Revenue Authority had, in a newspaper advertisement on Tuesday, announced that the levy “has come into effect”, meaning every employed Kenyan would remit 1.5 per cent of their basic salary for April to the National Housing Development Fund.
The advert immediately attracted the ire of Kenyans who have trolled the project on the social media and on talk shows on radio and television.
Kenyans questioned whether the government is able to deliver the project yet it has failed to build the five stadia it pledged during campaigns and is yet to complete the 10,000 police houses since 2013.
“President Uhuru Kenyatta has only 48 months to complete his term. To deliver 500k houses within 48 months, he MUST build AT LEAST 388 houses per day. This is an insult to the intelligence of Kenyans. #HousingFundLevy,” wrote Bosire on Twitter.
Cofek challenged the taxation, saying “it is unreasonable to compel citizens who will not secure a house to contribute towards house ownership by another person without corresponding benefit”.
Mohammed Hersi, national chairman of the Kenya Tourism Federation (KTF), wondered why the government wanted Kenyans to trust them with billions of shillings when they had planned to fine whoever plunders the funds a paltry Sh10,000.
On Wednesday, Amani National Congress (ANC) leader Musalia Mudavadi added his voice to the uproar.
“With the high cost of basic commodities soaring further, and a biting drought, it is foolhardy to load the employee and employer with additional taxation through Housing Fund Levy,” said Mudavadi.
Machakos Governor Alfred Mutua said the government should postpone the implementation of the levy until Kenyans understand how it will benefit them.
Mutua said with rising fuel prices, low circulation of money and drought, the levy appears punitive.
In September, the government announced it had opened a portal for citizens to register and apply for housing units.
It said www.bomayangu.go.ke would allow it to plan the programme based on need and data submitted via the portal.
Under the portal, any interested Kenyan aged above 18 and with a national identity card would be required to submit personal details and their housing preferences during registration.
Upon registration, they will be allocated a unique identification number, which they will use to make monthly contributions to the Housing Fund, with a mandatory ceiling of Sh2,500 per month per employee and a similar amount by the employer. However, the monthly pay for the voluntary contributors will not be capped.
Under the project, the government will put up 170,000 houses by the end of this financial year (2019/20).
Association of Construction Managers of Kenya (ACMK) Chairman Nashon Okowa says this is the worst government project ever, and does not have any precedence globally.
“It is not the business of government to build houses, all it needs is to provide a conducive environment for affordable housing. With tax incentives, majority of Kenyans would afford houses,” says Okowa.
Okowa says it is surprising that with such a huge project, the government has not reached out to them as professionals to seek their advice on the best way forward.
Once complete, one-bedroom units will sell for between Sh600,000 and Sh1 million, while two-bedroom units will go for between Sh1.05 million and Sh1.5 million. Three-bedroom houses will cost Sh2 million each.
Abraham Samoei, the Institution of Surveyors of Kenya chairman, says the project is over-ambitious, given President Kenyatta has only three years in office.
“They should influence to lower prices of land, remove taxes on cement and fuel then give private sector room to deliver. The government cannot be the developer, it will take longer to deliver,” he said.
Kenya Property Development Association (KPDA) chairman Mucai Kunyiha says they have encouraged the government to remove systemic and structural impediments that hinder development of affordable housing.
“The ease of approvals and permits, speed and accuracy of transfers and registration and tax incentives will make construction inputs less costly,” said Kunyiha.
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