The High Court has raised purple flags over the legality of the obligatory month-to-month deductions to the Social Health Insurance Fund (SHIF), warning that the contributions might violate the Constitution.
In a judgment delivered on Monday, Justice Chacha Mwita questioned the equity of the two.75% wage deduction imposed on all salaried Kenyans underneath the SHIF scheme. He argued that the levy might quantity to double taxation, as residents are already obligated to pay revenue tax on their gross earnings underneath the Income Tax Act, whether or not the revenue is from employment or investments.
Justice Mwita mentioned it’s illegal to impose further prices on gross revenue that has already been subjected to revenue tax, insisting that such deductions undermine the rules of equitable taxation.
He described the SHIF contribution as a “unfavourable aspect of taxation,” stating it imposes an unfair burden on Kenyans and probably breaches constitutional protections for truthful and simply tax programs.
The decide made the remarks whereas presiding over a case filed by three docs who challenged the legality of the SHIF deductions.
The petitioners argued that pegging contributions to gross revenue was inherently discriminatory. They claimed that high-income earners would find yourself paying excess of their low-income counterparts, but each teams would obtain the identical customary of healthcare companies.
According to them, this disparity makes the SHIF system each unfair and unconstitutional.
Justice Mwita Strikes Out Petition
Despite acknowledging the seriousness of their issues, Justice Mwita struck out the petition. He defined that the court docket couldn’t proceed with the case whereas the same matter – Petition E513 of 2024- remains to be pending earlier than a unique High Court bench.
That petition not solely contests the legality of SHIF deductions but additionally challenges the constitutionality of a number of health-related legal guidelines, together with the Social Health Insurance Act, the Digital Health Care Act, and the Primary Health Care Act – all enacted in 2023.
The court docket additionally addressed the petitioners’ objections to the automated switch of member knowledge from the now-defunct National Health Insurance Fund (NHIF) to SHIF. They claimed the information handover violated privateness rights and lacked authorized backing.
However, the court docket dominated that the petitioners had not supplied enough proof to show any constitutional breach.
Justice Mwita cited Regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024, which authorizes the switch of NHIF knowledge to SHIF utilizing authorities databases. While the petitioners dismissed the regulation as an “afterthought,” the court docket discovered no robust authorized foundation to help their argument.
In conclusion, the decide emphasised that it might be improper to entertain the case whereas key points stay unresolved in parallel authorized challenges.
“For the above causes, this petition is struck out,” Justice Mwita dominated, successfully placing the matter on maintain till the broader constitutional questions are addressed within the different pending instances.
