SHIF deductions are unfair, court rules
The High Court on Monday ruled that the government’s move to deduct 2.75% of every Kenyan worker’s gross salary for the Social Health Insurance Fund (SHIF) amounts to double taxation and violates the Constitution.
Justice Chacha Mwita found that it is illegal to tax a worker’s income through PAYE (Pay As You Earn) and then again through SHIF without clear justification.
“Once income has been taxed, it cannot be subjected to further tax in the form of SHIF. That’s unconstitutional,” he ruled.
But despite this strong position, the court did not stop the deductions.
The judge said a similar case is already pending before a different High Court bench, and so this particular petition had to be struck out to avoid confusion.
This means that for now, deductions will continue, and workers will still see the SHIF cut on their payslips until the main petition is concluded.
What does this mean for an ordinary Kenyan?
The court agrees the SHIF deductions are unconstitutional.
But the ruling didn’t stop them, due to a pending related case.
So the money is still being deducted from salaries.
The issue is not over--a final ruling is yet to be delivered in the other case.
This is not the first time the High Court has questioned such deductions.
In November 2023, a three-judge bench declared the Affordable Housing Levy unconstitutional, also calling it discriminatory and unfair.
The court said salaried Kenyans were being unfairly targeted, while those in informal sectors were left out--making it unequal and unjust.
The government appealed that ruling and briefly continued with the Housing Levy deductions, but the Court of Appeal later upheld the High Court decision, forcing the government to suspend collections.
The SHIF case is now following a similar path, with courts once again stepping in to question how far the state can go in dipping into citizens’ pockets.
For now, Kenyans will continue to bear the burden of the SHIF deduction, as legal battles continue.
