Cabinet Secretary for the National Treasury and Economic Planning in Kenya, John Mbadi, has announced plans by the government to halt the Pay As You Earn (PAYE) taxation on the salaries of Kenyans earning below Ksh 30,000 per month.
Speaking during the Privatization and Budget People’s Dialogue in Meru, Mbadi said the proposal is aimed at easing the financial burden on low-income earners who have borne the brunt of rising taxes, statutory deductions and persistent inflation at a time when the national debt is easing.
He noted that many low-income earners spend most of their salaries on essentials such as food, rent, transport and school fees, leaving them with little or nothing to save.
Govt to Scrap PAYE for Kenyans
CS Mbadi announced that the idea was brought to him by President William Ruto, who asked for the amendment to be taken to parliament for approval.
Mbadi said the government is reviewing the current income tax system to make it fairer.
He admitted that recent tax measures and statutory deductions have reduced the net pay of many workers, especially those in lower income brackets.
“Anyone earning below Ksh30,000 in Kenya should not pay PAYE. It is just not fair. I earn a million shillings, let the government come for me and my fellow members of parliament,” Mbadi announced.
According to the Treasury, removing PAYE for low earners will help restore purchasing power and allow families to spend more on basic goods and services.
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CS Mbadi added that currently, 3,065,165 Kenyans are salaried in the country.
Of the total, 1.5 million Kenyans earn Ksh30,000 or less, which is a very small amount to tax.
More relief for Kenyans
CS Mbadi further added that for the 244,000 Kenyans earning Ksh30,000 to Ksh50,000, the government would also reduce the tax rate on salaries by 5% to 25%, from the previous 30%.
In total, Mbadi stated that the government has accounted for the number of Kenyans to be around 1.7 million Kenyans.
To further reduce the national debt following these tax reliefs, Mbadi stated that the government plans to crack down on Kenyans evading taxes.
“Just because you are not on the payroll, you want to always stash away all your money without paying taxes, yet you want to use the same roads as those who are salaried. That is not good,” Mbadi said.
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He warned that the government is developing even stricter measures to ensure compliance but added that its officials will not use force.
“Paying taxes does not need any military action. We will come to you softly, and when KRA sees that you are somewhere and evading taxes, they will just follow the procedure.”
Mbadi on Tax Payment
According to Mbadi, most Kenyans are not paying the required taxes or paying them at all.
He stated that this paralyzes the government’s plans and does not help reduce the huge national debt the current government inherited from the previous one.
“The government should be receiving between Ksh82 billion to Ksh100 billion as taxes from Kenyans. You people are only giving us Ksh17 billion. The rest of the burden you have left it to the government,” Mbadi stated.
He concluded by stating that such irreguralities are the factors behind the government’s decision to halt the 1.7 million Kenyans from paying taxes.
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