The Law Society of Kenya (LSK) has Friday moved to court to challenge the constitutionality of the Finance Act, 2023.
In a certificate of urgency, the society claims that the mandatory affordable housing levy threatens the social economic interest of Kenyans.
The National Assembly, Kenya Revenue Authority (KRA) Commissioner General, as well as the Attorney General, have been named as respondents in the case.
Through lawyer Noel Ngoloma Okwach LSK argues the Court ought to safeguard the people’s right to life which is on the verge of being rendered meaningless since their opportunity to make a living is under threat by the impugned Section 7, 33 (a)and 84 of the Finance Act.
In addition, the society argued that the heavy burden to be shouldered by the employers and employees after the enactment of the law will further lower the rate of employment in a country which is already grappling with low rates of employment which is against the principle of social justice as stipulated in the Constitution.
The move by LSK comes after a notice published in local dailies by the Kenya Revenue Authority (KRA) said that the deductions will be backdated to July 1st when the Act was supposed to take effect.
This translates to high-income earners earning over Ksh 500,000 now finding themselves subject to new tax rates.
The changes bring a significant increase, with that earning between Ksh 500,000 and Ksh 800,000 facing a 32.5 per cent rate, while those surpassing Ksh 800,000 will be taxed at 35 per cent.
The authority advises affected individuals to promptly download the updated P-10 forms to ensure compliance with the revised tax rates.
This comes after the Court of Appeal lifted the suspension of the conservatory orders barring the implementation of the contentious Finance Act, 2023.
On Wednesday, August 2, through a public notice, the Ministry of Lands, Public Works, Housing and Urban Development said the levy is now in effect and that the government had appointed the KRA as the collection agent .
“The levy is payable by the employee and employer at a rate of one point five per centum (1.5 per cent) of the employee’s gross monthly salary by the employee, and one point five per centum of the employee’s monthly gross salary by the employer, as outlined in the Finance Act 2023,” read the notice.
