The High Court has raised red flags over the legality of the mandatory monthly deductions to the Social Health Insurance Fund (SHIF), warning that the contributions could violate the Constitution.
In a judgment delivered on Monday, Justice Chacha Mwita questioned the fairness of the 2.75% salary deduction imposed on all salaried Kenyans under the SHIF scheme. He argued that the levy could amount to double taxation, as citizens are already obligated to pay income tax on their gross earnings under the Income Tax Act, whether the income is from employment or investments.
Justice Mwita said it is unlawful to impose additional charges on gross income that has already been subjected to income tax, insisting that such deductions undermine the principles of equitable taxation.
He described the SHIF contribution as a “negative element of taxation,” stating it imposes an unfair burden on Kenyans and potentially breaches constitutional protections for fair and just tax systems.
The judge made the remarks while presiding over a case filed by three doctors who challenged the legality of the SHIF deductions.
The petitioners argued that pegging contributions to gross income was inherently discriminatory. They claimed that high-income earners would end up paying far more than their low-income counterparts, yet both groups would receive the same standard of healthcare services.
According to them, this disparity makes the SHIF system both unfair and unconstitutional.
Justice Mwita Strikes Out Petition
Despite acknowledging the seriousness of their concerns, Justice Mwita struck out the petition. He explained that the court could not proceed with the case while a similar matter – Petition E513 of 2024- is still pending before a different High Court bench.
That petition not only contests the legality of SHIF deductions but also challenges the constitutionality of several health-related laws, including the Social Health Insurance Act, the Digital Health Care Act, and the Primary Health Care Act – all enacted in 2023.
The court also addressed the petitioners’ objections to the automatic transfer of member data from the now-defunct National Health Insurance Fund (NHIF) to SHIF. They claimed the data handover violated privacy rights and lacked legal backing.
However, the court ruled that the petitioners had not provided sufficient evidence to prove any constitutional breach.
Justice Mwita cited Regulation 5 of the Social Health Insurance (Amendment) Regulations, 2024, which authorizes the transfer of NHIF data to SHIF using government databases. While the petitioners dismissed the regulation as an “afterthought,” the court found no strong legal basis to support their argument.
In conclusion, the judge emphasized that it would be improper to entertain the case while key issues remain unresolved in parallel legal challenges.
“For the above reasons, this petition is struck out,” Justice Mwita ruled, effectively putting the matter on hold until the broader constitutional questions are addressed in the other pending cases.
