Sakaja Bill proposes exemption from paying rent, salary cuts

Wednesday, April 15th, 2020 12:00 |
Senate Committee on Labour and Social Welfare Chairman Johnson Sakaja PHOTO/COURTESY

Anthony Mwangi and Hillary Mageka

The Senate is proposing radical measures that will see Kenyans who have been hit hard by the Covid-19 pandemic exempted from paying rent and utilities charges as well as servicing loans.

The proposal also seeks to cushion those in employment from salary cuts and businessmen from paying for trading licences and land rates.

The recommendations are contained in the Pandemic Response and Management Bill, 2020, which is sponsored by Nairobi Senator Johnson Sakaja.

Sakaja, who is the chairman of the Senate Ad Hoc Committee on Covid-19, says the Bill is aimed at providing a framework for the effective response to and management of a pandemic in order to prevent the occurrence or spread of a pandemic whenever it arises.

“The Bill seeks to provide measures to mitigate against the effects of the pandemic and provide a mechanism to cushion those that may be adversely affected,” reads the bill.

Tax measures

If it sails through the Senate, the National Treasury Cabinet Secretary will, with the approval of Parliament, introduce tax measures to cushion the affected people for the period of the pandemic.

At the same time, the National Assembly yesterday endorsed the reduction of Value Added Tax (VAT) from 16 to 14 per cent as proposed by President Uhuru Kenyatta in a move that is aimed at cushioning Kenyans against effects of coronavirus. However, some members questioned the move to reduce VAT, saying it will not have any meaningful impact on the common man.

“Treasury erred by reducing taxes. In an economy where prices of commodities are liberalised you cannot control prices, the common man will not feel it as Treasury will have to make increments elsewhere to cover the gap,” said Kipipiri MP Amos Kimunya.

“This is a populist move by Treasury which is not sustainable. For instance, they are now introducing VAT on agricultural products to cover the lost amount in VAT,” Kimunya, a former Finance minister, added.

Homa Bay MP Peter Kaluma said the situation will require the government to have a lot of money to reduce VAT and expect things to remain the same.

“Reduction of VAT without corresponding measures will not help, it will instead make things worse,” said Kaluma.

Sakaja’s Senate Bill seeks to have tenants give a notice in writing to their landlords or contracting party that they are unable pay rent because of the coronavirus pandemic.

Reads the draft: “Upon receipt of a notice, the contracting parties shall enter into an agreement on how the tenant shall meet their obligation at the end of the pandemic.”

The Cabinet Secretary in charge of Housing, will provide measures to cushion landlords and tenants during the period under review.

In situations where those affected are incapable of servicing their loans and mortgages because of the pandemic, borrowers shall notify and enter into an agreement with the lending institution on how to make the payments after the pandemic.

Sakaja wants borrowers saved from the burden of paying penalties and the Credit Reference Bureau (CRB) will not list those who default during the period.

“Lenders shall not charge fees, interest or any other penalty for non-payment or late payment of obligations during the pandemic period,” it states.

And where a contract was entered into before the declaration of a pandemic and the pandemic affects the performance of a contractual obligation, commencement of levying of execution, enforcement of security over movable and immovable property used for the purpose of a trade, business or profession, repossession of any goods used for the purpose of a trade, business or profession or termination of lease or license shall be prohibited.

The Bill states that employers shall not terminate a contract of service or dismiss or coerce an employee to take a salary cut.

“Despite subsection (1), where an employer is unable to meet his obligations to pay salaries or wages, the employer shall permit an employee to take leave of absence without pay for the duration of the pandemic,” it says.

The Labour CS shall develop measures to protect the employer and the employee during the pandemic.

During this period, National and County governments will be required to put in place social safety schemes designed to support vulnerable persons, households and informal sector workers whose incomes have been disrupted.

The schemes include unconditional cash transfers to support the identified groups to meet their daily basic necessities.

The governments may also waive water and electricity charges for identified vulnerable persons and households or adjust tariff rates in order to reduce utility charges to individuals and businesses. There shall be no disconnection for non-payment of utility bills.

County governments may suspend fees payable on renewal of trade licences and payment of property rates during the pandemic.

The President may declare, in a gazette notice, a pandemic upon receipt of a recommendation from CS in charge of Health.

The Head of State shall then establish a National Pandemic Response Committee to, among other things, co-ordinate the country’s response and management of the threat caused by the pandemic.

The committee shall consist of the Health CS, who shall be the chairperson; Treasury PS and other Cabinet and Principal Secretaries as the President shall consider necessary.

The committee shall during the period of the pandemic, prepare and submit to Parliament bi-weekly status reports.

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