The High Court in Nairobi has temporarily suspended the 1.5 per cent National Housing Development Fund, set to be levied on all salaried workers.
Cotu had gone to court to challenge the Government's decision to levy workers in a bid to finance the ambitious housing project.
In its suit, Cotu argues that there was no public participation before the Government imposed the tax under the Finance Act, 2018, making it unconstitutional.
Justice Hellen Wasilwa suspended the levy, pending the hearing of the case, terming the suit extremely urgent.
“I direct that the matter be heard on January 21, 2019 and the respondents should be served with this order by then,” said Wasilwa.
Treasury Cabinet Secretary Henry Rotich, his Transport, Infrastructure and Housing counterpart James Macharia and the Attorney General are named as respondents in the case, while the Federation of Kenya Employers (FKE) is named as an interested party.
The trade union says deduction of 1.5 per cent of employees' basic salaries will force people into servitude, resulting in widespread public discontent.
In an affidavit, Cotu Secretary General Francis Atwoli argues that sections of the Act require a serious public debate to enable stakeholders understand the implications of the provisions.
Atwoli stated that the amendment of section 31A of the Act contravenes Article 118 of the Constitution — with respect to facilitation of public participation and involvement in its legislative and other business as there was no consultation with stakeholders in the labour movement.
“The petitioner is opposed to the proposed amendments due to the fact that they don’t promote good governance, accountability and transparency," he says.
Similarly, Atwoli says introducing the 1.5 per cent housing development levy will result in an increase in the general price levels across various sectors. This in turn will lead to high cost of living and increased inflation, he avers.