Kenyans question salary deduction plan for new housing fund

Kenyans question salary deduction plan for new housing fund

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

According to the Federation of Kenyan Employers (FKE), this will increase the cost of operations and burden employees even as the government defends the move.

The State has indicated that this is the best bet to affordable housing for low income earners in Kenya.

Treasury is pushing for the amendment of section 31 of the Employment Act which will see employees contribute a maximum of Ksh.5000.

The money is to be contributed to the National Housing Development Fund as one percent of their gross salary.

“The announcement by Treasury to introduce what is essentially a tax on housing to be paid by employers came as a surprise…

“We find it difficult to support this amendment because we do not know the parameters, the assessments done to arrive at the quantum,” FKE said.

“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?” Jacqueline Mugo, FKE chief executive posed.

In particular, employers are worried about the fate of existing housing units currently in place.

“We have the Housing Act which already talks about a housing Fund. What is the difference between this one and the one in the housing fund?” she further asked.

Treasury CS Henry Rotich reiterated that the one percent of employee salary is money that will go to housing fund to enable development of affordable housing.

He added that those who will have priority access to affordable housing will be Kenyans who have contributed towards this fund.

“This is how it works in most countries to ensure we have necessary pool of resources to develop,” Rotich noted.

It now appears that both employers and workers have got more questions than answers with regard to the proposed housing fund, their key concern being the cost implications going forward.

“I oppose it, I am not happy with the proposal. I am still on the same salary; I am straining so this deduction will strain me even more,” Eliud Mukhutsi, a resident in Nairobi told Citizen TV.

“The problem we have with any project by the government is corruption; it’s 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.

According to the National Housing Corporation, Kenya’s housing deficit currently stands at two million units, but the country can only produce a paltry 50,000 units.

“We need to have assessments done, reports done to inform these policy decisions, if you have a Housing Act already in place and an Employment Act, then will you still pay into this fund,” Mrs. Mugo added.

Tags:

National Housing Development Fund Housing Act

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