The High Court has declared the Housing Levy prescribed under the Finance Act (2023) unconstitutional for violating key provisions.

A three-judge bench comprising Justices David Majanja, Christine Meoli, and Lawrence Mugambi argued that the law failed to conform to the principle of nondiscrimination by singling out the formal sector without justification.

The High Court ruled that introducing the levy was discriminatory since it imposed taxes solely targeting salaried Kenyans, excluding those in the informal sector.

 Justice Majanja pointed out that the levy amendment lacks a comprehensive legal framework and contravened Article 10, 2 (a) of the Constitution while delivering the verdict.

“The levy against persons in formal employment to the exclusion of other non-formal income earners without justification is discriminatory, irrational, arbitrary and against the constitution,” he said.

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Further, the court directed employers to stop deducting the levy from their employees immediately.

“An order is granted prohibiting the respondents from collecting, charging or otherwise charging on Affordable Housing Act on the basis of section 84 of the Finance Act and all prayers on the consolidated petition not specifically granted are dismissed,” Majanja said.

Additionally, the court ruled that, given the nature of litigation involving public interest, each party would bear its costs.

President William Ruto ascended the Finance Act 2023 into law on June 26 after Parliament passed the Finance Bill 2023 on June 22, 2023.

The High Court later suspended the implementation in response to multiple petitions, including one Busia senator Okiya Omtatah's filing.