Kwame Owino, CEO of the Institute for Economic Affairs, maintains that the National Housing Levy included in the Finance Bill 2023 is a “bad idea” and that Kenyans shouldn’t be duped into accepting it.
On Wednesday, Owino said during a discussion on the Finance Bill presented by Citizen TV that the government’s ardent desire to implement the housing tax programme is intended to honour obligations made to contractors and other beneficiaries of the contentious housing programme.
“Kenyans, please remember that I am not a member of parliament who has been elected, I am not running for office, and I am not an employee of the government. This is a terrible idea, let me tell you that,” remarked Kwame.
“The PSs (Principal Secretaries) have made agreements with those who are meant to build homes and given them free land to accomplish so,” he added, “so we are misdefining the issue.”
Owino asserts that the plan made by the government of President William Ruto is not entirely truthful to Kenyans and aims to enrich a select group of people in society.
“The PS (Hinga) said that they have a number of people whom they call stakeholders but aren’t contributing their own money, but the investors are receiving instructions to construct with the assurance that this fund will compensate for the risk by compensating them,” said Owino.
“The government is taxed at 11% or 12% today, so what the government is doing is using taxes to redistribute, which is not a bad thing,” the speaker said. However, let’s avoid using deception to divide the money among Kenyans.
Owino thinks that the state should have enabled investors to build the homes first and given a guarantee to the contractor who finished the project satisfactorily.
“If the fund was a good idea, the same individual investors we have been talking about weren’t going to require the government; they would say, “Let us build the houses, and afterwards anyone might offtake, meaning assurance is being delivered to whoever does the construction; we already have an offtake plan,” he said.
“Why is this money necessary for the establishment of what is being referred to as a fund that serves to mitigate that risk so that whoever builds can be certain the government will offtake? Actually, what is being referred to as a fund is a financial structure rather than a financing mechanism.
Owino mocked the fund, claiming it will burden Kenyans more, particularly those working in the public sector.
Owino claimed that the majority of Kenyans were struggling with low income and weren’t definitely in need of nicer homes, referring to the present housing mortgage, which he emphasised is being supported by taxpayers.
“MPs came here and assured us that there would be affordable housing for those who already own homes. In Kenya, there is already a high-cost housing subsidy that is provided to lawmakers and employees of the public sector; it is paid for by taxes paid by the public and allows for mortgages of up to Ksh. 9 million.
He said that instead of constructing homes for the populace and requiring people to buy them, the administration should concentrate on boosting income levels if it was really committed to resolving the nation’s housing crisis.
“Article 43 of the Constitution, which states that people have a right to housing and other rights, does not state that the authorities must force us to make payments for it,” he pointed out. “If the administration wants to construct houses to accommodate those who live in slums or are poorer, that is not a bad thing,” he said.
“In Kenya, there are 14 million homes of all sizes and standards. The issue is not one of housing. For instance, there are vacant homes in Nairobi; however, this is due to a lack of available revenue. We are informed that it is not a tax, but what it really implies is that the employer is being taxed and will pay the maximum of Ksh. 2500,” said Owino.
The CEO of the Institute for Economic Affairs questions the claim that the government’s affordable housing programme would generate as many jobs as it claims.
“There are 14 million households in Kenya, according to statistics from the Kenya National Bureau of Statistics. If 14 million homes haven’t generated the abundance of employment you do, why do these people believe that building 250,000 houses in a year will?” Charles Hinga, the Housing PS, made a remark to which Owino responded, “You are lying to us.”
