Bad week for Ruto as court blocks housing levy
Kenyan High Court judges have this week issued orders against the enforcement of new social housing and healthcare taxes, delivering a major blow to President William Ruto’s quest to push through his bottom-up economic agenda.
The separate rulings made within days of each other temporarily halted the deduction of a 1.5 percent housing levy from workers’ gross monthly salaries, which is matched by employers, and another 2.57 percent towards social healthcare insurance.
The state has appealed the judges’ decision outlawing the housing levy while the petition against the social healthcare tax will be heard in February next year.
Read:Kenya High Court quashes housing levy
The two taxes are unpopular with salaried workers, whose take-home pay is set to further shrink significantly after employers make basic statutory deductions and withhold money towards loans and other obligations. But President Ruto, who is under pressure to deliver on some of his populist election campaign promises while at the same time implementing structural adjustment programmes sanctioned by the World Bank and the IMF as a condition for loans, is determined to save the taxes.
Speaking shortly after the judges agreed to suspend their Tuesday order stopping the collection of the housing levy, President Ruto said the government would use the 45-day window provided by the court to have the tax law regularised by Parliament.
His confidence no doubt stems from the fact that the power balance in Parliament is tilted in favour of his Kenya Kwanza coalition after several opposition members controversially shifted their loyalties.
Opposition leader Raila Odinga, who led anti-government street protests between March and July to push for, among others, a review of punitive taxes, has hinted at a resumption of mass action in future after the government declined to include commitments to lower the cost of living in the report of a bipartisan talks committee set up to recommend reforms.
But his Azimio la Umoja One Kenya Alliance appears divided after other key leaders in the opposition coalition took clashing positions on the report released last week. That leaves the courts as the most formidable checkpoint for President Ruto’s administration’s policy decisions, for now.
President Ruto suffered his first major legal loss in July when judges declared the position of chief administrative secretary (CAS illegal, blocking 51 people he had appointed from assuming office.
Read:Ruto’s ‘Hustler Budget’ is not very popular
Around the same time, a court suspended the implementation of the new Finance Act, freezing billions of shillings in tax collections a day and disrupting the administration’s spending plans.
Citizen litigation was a thorn in the flesh for the administration of his predecessor Uhuru Kenyatta, with the courts most famously blocking the push to change the Constitution at a referendum through the government-backed Building Bridges Initiative reform proposals.
Kenyatta’s relationship with the Judiciary particularly got sour during his second term in office following the landmark Supreme Court that nullified his re-election victory and ordered a repeat election in 2017.
His critics accused him of retaliating by squeezing the Judiciary budget and stalling and cherry-picking on the appointment 41 judges nominated by the Judicial Service Commission.
President Ruto was seen to be keen to mend fences, having moved to appoint the six judges overlooked by Kenyatta on his first day in office and instructing the exchequer to give the Judiciary more funds. The opposition alleged, without giving any evidence, that the president’s decisions were part of a scheme to capture the public accountability institutions after defections handed him control of Parliament.