Greetings and welcome to the fourteenth Money Weekly Roundup of 2024! 

This week, Senator Okiya Omtatah and counterparts are in court over the legalities of the Housing Levy, questioning the collector, board operationalisation and the 1.5% flat rate.

Meanwhile, the Ministry of Lands has issued a directive to double the stamp duty in 83 municipalities around the country.

As always, we’ve included some of our favourite personal finance articles in our Finance Tips section below.

Let’s dive in.

NEWS RECAP

What happened this week

🏠 Persistent Legal Cloud Hangs Over Housing Levy

It is barely a month after President Ruto signed the Affordable Housing Bill 2023 into law and the law is being challenged once more in the courts. A group of human rights activists led by Busia Senator Okiya Omtatah has gone back to court. Their petition raises three major issues. 

1. The Kenya Revenue Authority's (KRA) Commissioner General (CG)

• Who can collect: KRA’s CG cannot be the collector of the Affordable Housing Levy.

• CG’s authority: CG’s responsibilities are strictly to the authority and the CG is not the authority.

• Donation of powers: The CG cannot undertake functions donated to KRA and KRA does not have the power to delegate such functions.

• Security of funds: Monies collected under the CG will be exposed to theft since they are not secured under any existing funds, including Consolidated Fund. Read More.

2. Operationalisation of the Affordable Housing Board

The housing board is tasked with approving revenue and expenditure estimates for the fund; therefore, since the board has not been operationalised, funds cannot be lawfully raised from the public. Read More.

3. The Setting of 1.5% Flat Rate

The revenue and expenditure of the housing fund will be managed by the board and will be subject to the Fund’s annual budget; hence, the tax rate will have to be adjusted annually to raise the required revenue. This defeats the logic behind the 1.5% fixed rate, the petitioners argue.

They also seek the court to provide the following directives:

• Urgent Matter: The matter be treated with urgency, referred to Chief Justice Martha Koome and heard by an odd number of judges, not less than three.

• Cease Related Activities: Stop the National Assembly and 11 other respondents from acting retroactively to address issues that the High Court has ruled unconstitutional.

• Protect Public Land: Restrain the State Department of Housing and Urban Development, the National Land Commission, and any other agency from approving the use of public land for the construction of affordable housing.

Further, the petitioner asserts that implementation of the Affordable Housing Act will lead to violations of the following parts of the constitution:.

• Principles of Governance (Article 10): Good governance, transparency, integrity, accountability, and sustainable development.

• Right to fair administrative action (Article 47(1)): expeditious, efficient, reasonable, and procedurally fair.

• Principles of Public Finance (Article 201): openness, accountability, prudent and responsible use of public funds.

• Principles of Public Service (Article 232): efficient, effective, and economical use of resources; accountability; and transparency for administrative acts. Read More.

👩‍💼 Employees Face Yet Another Tax Hike

The KRA has raised taxes for the fourth straight quarter on employee welfare support. 

• The Fringe Benefits Tax - tax on employee welfare benefits - has been adjusted to 16% for the three months to June 2024 from 15% in the first three months of 2024.

• The Deemed Interest Rate - interest-free borrowing by foreign-controlled entities in Kenya attracts this tax that has been adjusted to 15% from 14% for the same period.

The fringe tax has been on a constant rise since 2022, when the taxman increased it from 7%. Learn More.

📈 2x Rise in Stamp Duty 

In the latest directive by the Principal Secretary, State Department for Lands and Physical Planning, Nixon Korir, Stamp Duty on the Transfer of Land in 83 municipalities is expected to rise to 4%.

• Stamp Duty is a tax levied on various transactions including the transfer of land and property among others. 

The government charges a stamp duty of 4% of the value of the land in urban centres and 2% in rural areas. However, due to the new directive, stamp duty in the listed 83 municipalities - that include Kajiado, Juja, Nakuru and Nanyuki - will be bumped from 2% to 4%.

🚢 Rebound in Imports

The rebound in the Kenyan shilling and the improvements in dollar availability are expected to fuel a recovery in imports this year. According to the Central Bank of Kenya (CBK), a jump in imports will expose the shilling to renewed pressure, depending on the performance of exports and remittances.

• Imports: The apex bank foresees 11% growth in exports to rise to Ksh2.48 trillion ($19 billion) in 2024. This will be up from the Ksh2.2 trillion ($17.1 billion) imported in 2023.

• Exports: In 2023, the export value dropped to Ksh946.8 billion ($7.2 billion) from Ksh968.1 billion ($7.4 billion) in 2022. Read More.

🔍 Tracking Gas Cylinders

In a move to combat illegal Liquid Petroleum Gas (LPG) refilling stations and the black market trade in LPG, the government plans to introduce automated tracking starting in July this year. Two technologies are set to be used: 

• Internet of Things (IoT) - the use of sensors, software, and network connectivity to facilitate the collection and sharing of data.

• Radiofrequency identity (RFID) - a wireless system that helps to automatically monitor the locations and other data from a specific device.

The current regulations depend on receipts issued by cooking gas dealers. The law stipulates that the receipt must indicate the serial numbers of the seal, date of sale, cylinder gas container, cylinder brand, contact information of the consumer, and the name and contact information of the seller. Read More.

Want more details? Check our full weekly update here:

MONEY TIPS & TOOLS

This week’s finance tips

Welcome to Money254's Money Tips! Here, we share quick and easy tips that make understanding and managing your money a breeze. We break down the tricky parts of your finances and the financial landscape, making it simple and clear for you. Stay tuned for helpful tips every week.

MONEY254 #MONEYTOK OF THE WEEK

What is the Rule of 72 when investing?

In today's #MoneyTok, we explore a handy concept in investing called the Rule of 72. It is a rule of thumb used to estimate the number of years it will take for an investment to double in value, given a fixed annual rate of return. By leveraging this rule, you can assess the potential growth of your investments and make informed decisions about where to allocate your resources. Watch Video 

@money254hq

What is the Rule of 72 When Investing and How Does it Work? #Money254 #Ruleof72 #ruleof72🎯 #Investing #Moneytok #Personalfinance #Savings #Fyp

That’s a wrap for this week’s Money Weekly!

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Eric and the Money254 editorial team.