President William Ruto has announced new tax relief measures aimed at reducing the cost of living for Kenyan workers.
Under the new proposals, workers earning up to Sh30,000 per month will be exempt from paying income tax. Those earning up to Sh50,000 will also benefit from a reduction in Pay As You Earn (PAYE) tax to 25 per cent from the current 35 per cent.
The President said the move is meant to increase disposable income for low and middle-income earners and ease financial pressure on households.
“About 1.5 million working Kenyans will not pay any taxes. Another 500,000 workers will have their taxes reduced from 30 per cent to 25 per cent. This is how we are addressing the cost of living from the bottom up. It was not just a slogan,” Ruto said.
National Treasury Cabinet Secretary John Mbadi said a Tax Laws (Amendment) Bill has already been prepared and will soon be tabled in Parliament. Speaking during a public participation forum on the budget in Meru town on Monday, Mbadi said the government is also targeting tax leakages.
He pointed out that rental income earners should be contributing up to Sh100 billion in taxes annually, but only Sh17 billion is currently being collected.
“Once this bill is passed, we will go after those making large amounts of money but not paying taxes. KRA will intensify monitoring to ensure everyone who earns income pays tax,” Mbadi said.
The Treasury’s proposal comes days after banks and Saccos called for the tax-free salary threshold to be raised to Sh40,000, citing the rising cost of living due to inflation.
Earlier, the World Bank had also suggested that Kenya increase the top income tax rate to 38 per cent, while lowering the tax rate to 25 per cent for workers earning between Sh32,000 and Sh166,000.
If approved by Parliament, the new measures are expected to offer relief to millions of Kenyan workers while expanding the tax base among high-income earners.
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