Housing Fund contribution causes storm

Housing Fund contribution causes storm

Employers are up in arms over the new proposals to contribute to a new housing fund.

The Federation of Kenyan Employers (FKE) says this will increase the cost of operations and burden employees.

This even as government says this is the best bet to affordable housing for low income earners in the country.

In the 2018/19 budget, the Treasury proposed to amend the Employment Act to include a 0.5 percent monthly deduction on gross salary to go into the proposed National Housing Development Fund.

Through the amendment, employers too will be required to match the contribution, with a maximum deduction of Ksh5,000 per month.

However FKE executive director Jacqueline Mugo said the move is ill advised.

“The announcement by treasury to introduce what is essentially a tax on housing to be paid by employers came as a surprise. The challenge is how to finance the big 4 agenda,” Ms Mugo said in an interview with Citizen Digital.

Housing has been a key feature of President Uhuru Kenyatta’s second term development plan, with focus on social and low cost housing.

The Government says the scheme will see 2,000 houses set up in each county and be allocated under a lottery scheme to weed out cartels.

Ms Mugo however said the proposed changes are quite vague adding that it is unlikely to benefit the primary contributor acquire a home.

“We find it difficult to support this amendment because we do not know the parameters, the assessments done to arrive at the quantum. What is the direct benefit that each employee will get? Are we guaranteeing that all the employees in the formal and informal sector will get the low cost housing?’ she questioned.

Treasury cabinet secretary Henry Rotich said the government’s motive remains noble adding that that he had received a request from the state department on housing to have a five percent deduction slary for the housing fund.

“The 0.5 percent of employee salary is money that will go to housing fund to enable development of affordable housing, and in terms of prioritizing those who will access affordable housing will be the contributors who have contributed towards this fund. This is how it works in most countries to ensure we have necessary pool of resources to develop,” Mr Rotich said.

Employees too have also not taken kindly to the additional burden.

“The problem we have with any project by the government is corruption, its good they have that scheme but which kind of people will get it, you will find you must have connections for you to secure it,” Vivon Oluoch an accountant in Nairobi said.

FKE has called for more inclusive deliberations to come up with a workable and acceptable framework.

Additional Reporting by Nancy Wangeci 

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