Government should lay bare its plan on housing project

President Uhuru (seated) assenting to Finance Bill 2018 (PHOTO: COURTESY)
NAIROBI, KENYA: The mandatory housing levy that will be imposed on taxpayers’ gross salary for the year beginning January 1, 2019 has been met with a lot of criticisms running from the Federation of Kenya Employers to the employees themselves. It is very ambitious of the government but the approach seems to be wrong as there is a general feeling that it will overburden the taxpayers.

Housing as it is in Kenya, is very costly, especially in the urban areas. Take for instance, Nairobi where a bedsitter costs Sh6 000 in the very least. The rent costs increase as one moves to areas with better security and easy access to the main road.

A survey carried by Ipsos Public Affairs in April 2018, on estimated total monthly income, revealed that 24 percent earned between Sh10 000 - Sh25 000; ten percent earned between Sh25 000 – Sh40 000; three percent earned between Sh40 000 – Sh55 000; one percent earned between Sh55 000 –Sh75 000 and another one percent earned between Sh75 000 and Sh100 000. Added to the high cost of living, increase in VAT on petroleum products, increase in excise duty on calls and internet, a housing levy of 1.5 percent is set to put a heavy load on the shoulders of the taxpayer.

It is a given that governments collect revenue through taxation. Increased taxation would only hurt less if the citizenry had faith on how their money is put to use. However, it is evident that there is likelihood that these taxes could be pocketed by a few government officials now that corruption cases are on the rise and none of the arrested suspects has been locked up.

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The government needs to redeem itself now that the Finance Bill 2018 has been passed into law. Something has got to give. Let the government give us a well laid plan on how it intends to carry the whole housing project. Whether it intends to build new houses or buy from real estate retailers. How payments will be done once the houses are up. It should be established whether the lowest earning Kenyan will manage to pay deposit and subsequent rent. It would do no good if a poor Kenyan will be forced to rent out their house because they cannot sustain rent with their meager income. That has been the tragedy of many housing schemes all across Africa. It would pay if the overall cost of housing goes down.

Transparency in the process will help restore faith in the government, and it will be the only way to hold the executive accountable for their actions and omissions.

Other considerations

Another important question to ask ourselves is how long this project will take given that we are only 4 years shy of having a new government which will probably have different core agendas? The government will probably need close to a decade to complete the houses as construction, as other projects, tends to be slowed down by needless bureaucracies. Also, this may be slowed down by the mere fact that collection of this revenue has to go on for a while before construction actually kicks in. This means that the project will run into the next government. Let’s hope that affordable housing means a lot to Kenya as a whole, so that the next government will be committed enough to carry on with the project.

It would also be worthy to ask ourselves whether supply will meet demand.  According to World Bank Kenya had an estimated population of 48.46 million people in 2016. This number is likely to be a little over 50 million when the next census is carried out in 2019. By the time it is 2029, we could be somewhere close to 80 million.

Lastly, I hope that this works. I would support a plan to provide better and affordable housing and do away with the likes of Kibera and Mukuru slums completely, if only the taxes are put to proper and rightful use.

The writer is a student at the Kenya School of Law

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Finance BillHousing Levy