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Reactions: Government set to begin mandatory salary deductions in order to fund housing project

Starting this coming month, the government is set to begin deducting 1.5 percent housing levy from all employees.

In a briefing made on Tuesday, the ministry of Housing and Urban Development said that the first contribution will be due by the 9th of May, 2019.

The ministry further instructed employers to remit the housing levy fund by the same date.

“provided that the sum of the total monthly contributions shall not exceed Sh5,000. Voluntary contributions may also be made to the scheme at a minimum of Sh2,000 per month,” read the statement in part.

Employers are expected to deduct and remit the levy together with other statutory levies from both the employer and the employee by the 9th of each succeeding month.

They also noted that this should be done together with other payroll statutory deductions.

Self-employed persons are allowed to join the fund as voluntary contributors by paying Sh200 a month; Sh100 for administration and Sh100 as a benefit.

After contributing without fail to the proposed National Housing Development Fund for that period, employees will qualify to get funds for a mortgage at 7 per cent annual interest rate, according to draft regulations.

This comes just months after the court temporarily suspended the implementation of the deduction of 1.5 per cent Housing Development Levy on workers’ salaries pending the hearing and determination of a case filed by COTU where Justice Hellen Wasilwa issued the interim orders suspending Section 31A of the Employment Act as amended by Section 86 of the Finance Act 2018.

COTU had contested the implementation of the levy saying it’s unconstitutional and amounts to double taxation.

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