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President William Ruto’s financial plans faced a setback as a Kenyan court declared the 1.5-percent housing levy on taxpayers, aimed at funding an affordable housing program, illegal. The ruling, delivered by a three-judge panel at the High Court in Nairobi, emphasized the absence of a comprehensive legal framework for the tax and criticized its exclusion of informal workers as “discriminatory and irrational.”

Judge David Majanja issued a prohibition order against the collection of the charge, known as the Affordable Housing Act. This decision is a blow to Ruto’s strategy to boost government finances, especially given the context of an already challenging economic environment.

The housing levy was part of a broader finance bill that increased taxes on various items, exacerbating the country’s existing struggle with high inflation. The public’s discontent over rising prices, particularly for essentials like food and fuel, manifested in protests earlier this year, some of which turned fatal.

Kenya, often considered East Africa’s economic powerhouse, grapples with a multitude of challenges, including dwindling government revenue and a devalued currency, resulting in escalating costs to repay the substantial public debt.

In response to the court’s ruling, the government has sought a stay order, introducing an additional layer of complexity to the nation’s economic landscape. As the situation unfolds, questions arise regarding the government’s financial strategies and their implications for Kenya’s economic future. This legal development holds significance not only within legal circles but also in the broader context of the nation’s economic trajectory.

Photo (John Ochieng/SOPA Images/LightRocket via Getty Images)

By: Montel Kamau
Serrari Financial Analyst
28th November, 2023

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