Kenyan workers may continue contributing to the 1.5 per cent Affordable Housing Levy long after President William Ruto leaves office if the National Treasury proceeds with plans to issue long-term bonds backed by the controversial tax.
According to a report by the Daily Nation, the government is considering a fiscal strategy that would securitise proceeds from the levy by issuing a dedicated housing bond to finance infrastructure and housing projects under the Affordable Housing Programme.
The move would effectively lock in the levy for years, as the tax revenues would be used to service debt owed to bondholders. Treasury bonds often have maturity periods that extend beyond a decade, meaning future administrations could be obligated to maintain the deduction until investors are fully repaid.
The Treasury argues that while billions of shillings have already been collected through the levy, much of the money has been committed to ongoing construction projects. To meet the government's target of delivering 250,000 housing units annually, additional upfront financing is required.
Analysts note that once the levy is securitised, abolishing it would become legally and financially challenging. Any attempt by a future government to scrap the deduction could expose the state to the risk of defaulting on bond obligations.
The proposal comes amid a significant expansion of the Affordable Housing Programme, which the government has positioned as a key pillar for job creation, urban development, and economic growth.
However, critics argue that converting the levy into a long-term financing instrument could effectively make the payroll deduction permanent, raising concerns about the financial burden on workers and the limited flexibility future governments would have in altering the policy.
Source Attributed: Nation Paper