Cotu, State housing tax deal foiled : The Standard

Lawyer Henry Kurauka (right) for Consumer Federation of Kenya (COFEK) and Grace Kanyiri for Kenya Federation of Employers (FKE) compare notes during the hearing of their application in which the two organizations are seeking orders to bar the implementation of the Housing Levy Fund taxation as proposed by the government. [George Njunge/Standard]

A court yesterday rejected a deal between the Government and a workers’ union on payment of the controversial housing levy.

Employment and Labour Relations Court Judge Maureen Onyango declined to lift orders barring the Government from deducting 1.5 per cent of employees’ salaries until the dispute is determined.
The Government has said the tax is expected to fund an affordable housing programme with 500,000 houses projected to be built in the next three years.
Lady Justice Onyango made the ruling following protests by the Federation of Kenya Employers (FKE) and the Consumers Federation of Kenya (Cofek) that the deal between the Government and the Central Organisation of Trade Unions (Cotu) was reached behind their backs.

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FKE lawyer Grace Kanyiri said they were not involved in the negotiations leading to the agreement despite the fact that employers will be forced to match their employees’ monthly contributions.
Secret deal
“This is a public-interest case that affects thousands of employees and it cannot be secretly dealt with behind closed doors. We wonder why Cotu went to negotiate alone and lied to the court that FKE had also agreed to the implementation of the housing tax,” said Ms Kanyiri.
Cofek lawyer Henry Kurauka said that the dispute over the housing levy was no longer a matter for one party to decide, but “an issue that must have the input of all Kenyans to know how the funds will be managed without overburdening them through tax”.
“The housing levy is causing a lot of public outrage. We cannot allow Cotu to decide on behalf of the public by entering into consent to allow its (tax) implementation without having the input of all stakeholders,” said Mr Kurauka.

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The Attorney General had requested a special court sitting to have the consent entered in a bid to lift the orders that stopped implementation of the housing levy.
Under the consent, Cotu agreed to withdraw the case and in return have one of its members nominated as board director of the National Housing Corporation, which will manage the housing scheme.
The consent also included an undertaking by the Government to gazette and implement a minimum wage increment of five per cent that has been outstanding.
“The Government also confirms that as part of implementation of the housing levy fund, Cotu and FKE representatives will be reinstated to the board of directors of the National Social Security Fund,” read the consent.
But Senior Counsel George Oraro, who was representing the Government, defended the consent stating that FKE “will not be prejudiced in any manner if the Government starts collecting the tax”.

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Cotu lawyer Okweh Achiando admitted that the union failed to involve other parties before reaching the agreement, adding that they did not do it in bad faith to benefit the union.

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