A Kenyan court on Tuesday quashed a controversial housing levy introduced by President William Ruto, dealing a blow to his plans to try to shore up depleted government coffers, but stayed the ruling until next year. The 1.5-percent levy on the salaries of all taxpaying Kenyans, to be matched by employers, was signed into law in June to fund an affordable housing programme. A three-judge panel at the High Court in Nairobi said the introduction of the tax lacked a comprehensive legal framework and the exclusion of informal workers was “discriminatory and irrational”.”An order is granted prohibiting the respondents from collecting… the charge known as the affordable housing act,” said judge David Majanja. The government asked the court for a 45-day stay order on the ruling to give it time to decide whether to appeal.”We are inclined to grant the stay for a temporary period, pending the filing of the formal application at the Court of Appeal,” said Majanja, putting the ruling on hold until January 10. Member of parliament and activist Okiya Omtatah Okoiti, who filed the lawsuit against the new tax, told AFP that the court “lacked the courage of its convictions” and said he would also appeal decisions that went against the petitioners. – Economic challenges – The housing levy was imposed as part of a finance law that raised taxes on a wide range of items in a move that has had a ripple effect in a country already hamstrung by high inflation. Anger over the rising prices, particularly for basics such as food and fuel, led to a series of sometimes deadly protests against Ruto’s government earlier this year.Critics accused Ruto of rowing back on promises made during the August 2022 election campaign, when he declared himself the champion of impoverished Kenyans and pledged to improve their economic fortunes.Ruto has defended the housing fund, saying it will construct homes for the poor, create employment and reduce public borrowing.East Africa’s economic powerhouse is facing a host of challenges, including government revenue shortfalls and a plunging currency that has sent repayment costs soaring on a public debt mountain.The nation of 53 million people was sitting on a historically high debt of more than 10.1 trillion shillings ($66 billion) at the end of June, according to Treasury figures, equivalent to around two-thirds of gross domestic product (GDP).The Kenya Revenue Authority said last month that it missed revenue targets for the June-September quarter by the equivalent of more than $500 million due to a depressed economy. Inflation has also remained stubbornly high, at an annual rate of 6.9 percent in October.
