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Finance Bill 2023 is substantially unconstitutional and anti-devolution

The infamous housing levy that President William Ruto is forcing on Kenyans has elicited considerable debate in the country. While many Kenyans rightly worry about the economics and fairness of the programme, few have raised questions about the constitutionality of the levy. One of the biggest casualties of this forced housing contribution is county governments. This is yet another national government onslaught on the county government’s mandates. For the few months Kenya Kwanza government has been in power, it has shown the highest detest for the county governments to the point of causing a near shutdown of county governments for lack of funds. Bells of the end of regionalism in 1969 ring round in the Ruto’s government. From cutting on county funding while increasing the national government spending to delay in disbursing county funds, the county governments are being set for failure. Talks of the county governments being ineffective and inefficient have been raised without questioning the role of the national government in county government woes. This opinion points out that the housing fund is one of the attacks that the Kenya Kwanza government has adopted against county governments.

For context, the President has articulated the housing contribution by stating that “every employee who contributes 3 percent, the law will compel their employer to also contribute 3 percent to the Housing Kitty”. Under Part 3 of Chapter 12 of the Constitution of Kenya, the government has powers to raise revenue or impose a charge provided it is authorized by parliament and not contrary to the Constitution. The constitutionality of the housing fund does not rest on whether it is a tax or savings, but rather, on the compulsory nature of the contribution and the extensive role of the national government.

The President captured the role of the national government in the following words, “as a government, we will be at the forefront in implementing this. For all employees of the government – approximately 700,000 – we will be saving 3 percent for them after they have made their own 3 percent contribution”. This statement raises the question of the role of the national government in housing. Schedule 4 of the Constitution of Kenya provides that the national government is mandated with “housing policy”. In contrast, the county governments are mandated under schedule 4 of the Constitution with “County planning and development, including—(d) housing”.

The involvement of the national government in structuring the spending for a county mandate is unconstitutional. The level of the government with the constitutional function should have the autonomy to design and implement its role. The design and visualization of the housing fund and the national government’s role in constructing the houses offend the Constitution. The fund would probably be constitutional if the national government raised revenues or taxes for housing and disbursed it to counties for housing spending. This is because it is crucial to distinguish the revenue-raising powers of the national government to impose a tax or savings and the actual implementation. The mandate of implementing a constitutional role involves questions such as when to execute, how to structure the execution, and who will deliver the services. It is therefore not in doubt that the national government has expanded its housing role beyond policy. The implementation role goes in hand with the spending powers.

While the Constitution requires the two levels of government to cooperate, cooperation should be distinguished from commandeering and usurpation. The national government will be commandeering and usurping county powers if it displaces or interferes with the reserved functions of the county government. A national policy that is intruding on the role of the county function by either designing or directing the counties on how to spend or ultimately implement its functions amounts to commandeering. The principle of non-usurpation and anti-commandeering is at the heart of the protection of the counties against the national government encroachment of the mandate. Although the counties are not entirely sovereign, they enjoy a functional autonomy that the housing levy offends.

The role of the national government should be limited to the development of housing policy. To understand this role, it is important to look at pari materia provisions such as health policy. The function of the national government in housing is listed alongside health, agricultural and veterinary policies. It begs the question of whether it would be constitutional for the national government to decide who to employ as doctors in county hospitals and to construct county hospitals. Some argue that Article 43 and 21 of the Constitution gives the national government the mandate to implement economic, social, and cultural rights including the right to health. However, Article 43 (1) (b) of the Constitution provides that “every person has a right to accessible and adequate housing”. Article 21 (2) of the Constitution provides that “the State shall take legislative, policy and other measures, including the setting of standards, to achieve the progressive realization of the rights guaranteed under Article 43”. To answer these concerns, the state does not mean national government,  but it means the government as a whole with different levels having distinct functions. This is the logic that justifies the county government having the health function despite Article 21 (2) and 43(1) (b) of the Constitution.

In conclusion, the national government’s insistence on structuring spending for a county function amounts to the usurpation of the county’s constitutional mandate. The role of the national government should be limited to housing policy development. The housing contribution is unconstitutional for the national government to intrude on a county function.