Nairobi — The Government has sought a 45-day stay to regularize the Housing Levy and impugned Finance Act provisions following the verdict by the High Court which has declared the Housing Levy unconstitutional for violating key provisions.
The Office of the Attorney General through its lawyer Mahat Somane argued that the declaration on the statutory instruments affects a "plethora" of regulations which they need to advise the state agencies and government institutions to comply with the judgment.
In relation to section 84 of the Finance Act which touches on the Housing levy, Somane said that the government also needs time to advise the parent ministries on any commitments or contracts they might have entered into in relations to the collections made under the housing levy.
"We understand that the court has pronounced itself. We want to comply and we will comply with the judgment of the court, but we are seeking in order that we don't occasion any loss to the public. We'd be given that time to be able to sort those issues out," Somane said.
Furthermore, Somane argued that they need the 45-day stay to save judicial time.
"For sure If that stay is not given, there will be a plethora of contempt proceedings against public officers for non-compliance with your judgment. In order to avoid that, we also want to make sure that we comply, and we advise them on what they need to actually do."
He added that the stay will also present them with an opportunity to consult on the way forward including on the decision to appeal the matter.
The application for a conservatory order was also backed by the national assembly through lawyer George Murugara who argued that they were aggrieved by the declarations on the Kenya Roads Board section 76 and 78, the Unclaimed Assets Act and the Statutory Instruments Acts and Section 84 of the Finance Act.
Murugara pleaded with the court to grant them the 45 days explaining that for the Housing Levy, they need to make the necessary adjustments to the government procedure of taxation so that no party, no arm of government, no officer of the government is sued for contempt.
He further argued that the ruling could result in what he described as "serious" economic consequences in the operation of the arms of government, and especially when it comes to affordable housing.
"It is vitally important that this is preserved for a while as the government considers the next alternative after appeal or rectifying the flaws in the law, as the Court has identified that in fact there may be nothing wrong with taxation itself. It's only that we do not have in place proper laws that are supposed to guide the policy," he said.
"I do pray that you grant a stay or a conservatory order for only 45 days by which time the respondents will have taken a decision on how best to move either to the court of appeal or to have enacted the proper legislation."
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On its part, the Kenya Revenue Authority (KRA) which also supported the application for a stay saying the pronouncement places the taxman in a "very awkward situation because we not only collect the housing fund, but there are also other agencies."
KRA lawyer Ochieng Gaya said that the authority will need time for system adjustment.
He also explained that judgment places KRA at a position where it will be subject to suits for illegally collected funds adding that they will need a stay order to prevent refund claims which shall be made.
"KRA finds itself in a position where it can only refund taxes under the statute. These have being declared to be outside the Statute where we will be subjected to damages suit in that regard, we'll be seeking that will be allowed to stay pending our our formal instructions from the client on the best way forward," he stated.
He argued that the petitioners will not be prejudiced in any manner, since they can claim reimbursement from the Ministry of Land.
However, the petitioners led by the Law Society of Kenya President Eric Theuri and Azimio la Umoja urged the court to dismiss the application saying it will mean what they described " an extension of the illegality."
Theuri argued that they will be no "difficulties" that will be occasioned by that decision High Court decisions as argued by the respondents adding that they have the capacity to implement it.
"The application is highly speculative...We ask the court not to entertain that application," Theuri said.
