Government Faces Setback as High Court Rules SHIF Health Insurance Deductions Illegal
The court, led by Judge Chacha Mwita, stated that these deductions amount to double taxation for employees who are already subject to income tax.
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By Brenda Muriithi
The government has suffered a blow following a Milimani High Court ruling that the 2.7% deduction from salaries for the SHIF health insurance is unlawful.
The court, led by Judge Chacha Mwita, stated that these deductions amount to double taxation for employees who are already subject to income tax.
Judge Mwito explained that the 2.7% deduction from an employee’s gross salary constitutes double payment, considering that income tax is already deducted from all earnings.
He warned that if enforced, this ruling could lead to a significant loss of government revenue.
However, the court did not provide a clear directive on whether the deductions should continue pending the conclusion of further legal proceedings regarding the tax.
This ruling comes at a time when the SHIF (Social Health Insurance Fund) has expressed concerns that some employees risk losing access to healthcare services after their employers failed to remit the required contributions, despite employees being registered.
SHIF has now announced that it is taking legal action against 44,000 employers who have so far neglected their obligations to remit the deductions.
The case raises critical questions about the future of health insurance deductions and their impact on both employees and government revenue.
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