Kenya’s Housing Levy Upheld, Boosting Ruto’s Funding Plans
Kenya’s High Court has upheld the validity of a controversial 1.5% housing levy, giving President William Ruto a major win in his efforts to secure funding for his ambitious affordable housing program, Bloomberg reports.
The ruling, issued on Tuesday, dismissed six legal challenges against the new law that reintroduced the levy, which was initially declared unconstitutional in 2023. The court found that the new legislation, which applies the levy to all taxpayers and establishes a dedicated housing fund, was valid and the petitioners had failed to provide sufficient grounds for its overturn.
The housing levy, which is matched by employers, has already generated 54.2 billion shillings ($420 million) since its reintroduction in March 2024. The government aims to collect a total of 63.2 billion shillings by June 2025, funding the construction of 200,000 affordable homes annually.
The ruling comes as a relief for Ruto’s administration, which is facing significant financial constraints. The government’s efforts to raise additional revenue through new taxes were met with widespread protests earlier this year, leading to the deaths of at least 60 people. As a result, the government has been forced to scale back its revenue-raising plans, creating a budget shortfall of $2.7 billion and pushing the projected deficit to 4.3% of GDP.
The construction industry has also been impacted by the government’s financial difficulties. A number of contractors have abandoned projects due to unpaid arrears, leading to a slowdown in the use of materials like cement, bitumen, iron, and steel.
