Kenyan court refuses to stay ruling invalidating housing levy

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Kenya’s Court of Appeal on Friday refused to extend a stay that had allowed the government to continue collecting a 1.5% levy to fund affordable housing despite a lower court having found the measure unconstitutional.

The levy was part of a finance law adopted in June that also doubled the value-added tax on fuel and increased the top income tax rate.

The law, intended to shore up government finances amid a high debt burden and fast-depreciating currency, sparked violent protests the following month by opponents who said it would further squeeze households at a time of rising living costs.

A trial court ruled in November that the levy was unconstitutional because the government had not provided a rational explanation for why it applied only to workers with employment in the formal sector.

The trial court stayed its ruling until the government could appeal, allowing the levy to continue to be collected.

The appeals court said the stay should not be extended since “the presumption of constitutional validity … was extinguished the moment the trial Court issued the declaration.”

“Public interest tilts in favour (of) awaiting the determination of the issues raised in the intended appeals,” the court said.

The housing levy is one of a raft of taxes President William Ruto’s government, which faces a June deadline to repay a $2 billion Eurobond, has introduced to increase revenues and fund social programmes.

Earlier this month, the Court of Appeal lifted a stay on a separate 2.75% tax intended to fund a national health insurance programme.