The topic on the Housing Levy has remained a hot one since the beginning of last year, dominating conversations across Kenya.
As part of one of his agenda, H.E., President William Ruto announced his proposal of the housing levy where every employed Kenyan would be mandated to contribute 1.5% of their monthly salary.
However, amid the country’s soaring cost of living, the levy met strong resistance due to its potential impact—further reducing incomes already burdened by escalated taxes and high living expenses.
He clarified that beyond addressing affordable housing, his vision aimed to generate employment opportunities for the nation’s youth. During a Sunday service at a church in Karen, he emphasized, “It wasn’t so much about the houses, it was so much about the jobs for the young people of Kenya.“
Despite the President’s efforts of sharing his vision and outlining the benefits of the housing levy, a lot of Kenyans still do not share in this vision. This skepticism stems from the overburdened pay slip caused by the increase in taxes- causing a lot of economic pressure.
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Additionally, the country’s opposition has been very relentless in voicing their dissatisfaction of the new levy, a bizarre action, as it contradicts their own campaign manifesto which advocated for the same housing levy. Most Kenyans however, are in support of their (opposition) sentiments.
Is the Housing Levy a good or bad thing?
To be able to properly evaluate something and make a conclusion of whether it is beneficial or not, it’s important to thoroughly examine its advantages and disadvantages. While direct deduction of income seems disadvantageous, an in depth analysis will reveal the many advantages of the levy.
Beyond providing shelter, the housing levy will see the growth of affordable housing which will, in one way or another, play a major role in eradicating informal settlements. Research has shown that the main disadvantage of informal settlements, is that, they are a breeding ground for criminal gangs and activities.
Affordable housing will solve this problem, since a lot of people will be able to move into well planned and safe neighborhoods.
Additionally, the levy will greatly stabilize housing for the mid to lower spectrum. The effect of this levy will stabilize the market rates given that the real estate market is quite overpriced. The housing levy’s advantages also extend to job creation, aligned with President Ruto’s target of building 250,000 houses annually.
As we are well aware, construction is a big driver of economies. As such, the construction of multiple houses per year will spur growth in related businesses and propel manufacturing, amplifying opportunities.
It will also foster informal ventures such as artisans that deal with fixtures such as doors, windows, iron sheets, paints, furniture, etc. Food vendors, popularly known as vibandas, will also greatly benefit as they will sprout up around the construction sites to sell food affordable to the construction workers.
Change, is not the most easily embraced of things and especially if the change is one that negatively impacts people’s finances. However, it is always important to consider the end goal in every situation. In my opinion, Kenyans stand to benefit immensely from the housing levy.
Besides homes, it will greatly stimulate trade, which will foster growth in both the formal and informal sectors in the country. This will potentially reduce the rate of unemployment, significantly lowering crime rates and most importantly the economy will thrive. That said, sacrificing immediate desires paves the way for a brighter future. Small sacrifices often lead to significant outcomes.