Employers Federation want PAYE lowered from 30% to 25%
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Employers Federation now wants the Ruto administration to lower PAYE from 30% to 25% and revert VAT on fuel back to 8%
Employers Federation now wants the Ruto administration to lower PAYE from 30% to 25% and revert VAT on fuel back to 8%
To help Kenyans and businesses struggling with the high cost of living, the Federation of Kenya Employers (FKE) asked President William Ruto’s administration to consider reducing the Pay As You Earn (PAYE) tax to a maximum of 25 percent.
In a statement to newsrooms signed by President Dr. Habil Olaka and Executive Director Jacqueline Mugo on Friday, FKE emphasized that it is imperative for the State to introduce measures to bolster the purchasing power of citizens and cash flow in businesses.
“We appeal to policymakers to consider reducing the PAYE to a maximum of 25%. This is because food inflation remains the highest contributor to the cost of living. With households spending about 60% of their income on food, it is prudent that households are supported to increase their disposable income,” read the statement.
“You cannot improve on the savings culture of your citizens and increase capital for investment if the people do not have adequate disposable income that enables them to cover their basic needs.”
Due to the regressive effects that the tax has had on Kenya’s economy, the federation further requested the State restore the Value Added Tax (VAT) on fuel to its original rate of 8% as it existed prior to the passage of the Finance Act, 2023.
The employers’ association also advocated for the corporation tax to be reverted to 25 percent.
“This will help in attracting investment and allowing the corporates to have money to plough back into their business to create more employment. The additional investment will result in more tax revenue,” said FKE.
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“In addition, we seek the removal of the minimum turnover tax. This tax is going to exacerbate informality and destroy micro businesses that employ 84% of wage employees in Kenya.”
The federation also proposed that the affordable housing levy be capped at Ksh.5,000 per month to support businesses and alleviate financial burdens on employees.
“We lastly urge that the Affordable Housing Levy be capped at Ksh.5,000 per month as it was originally proposed. Businesses are closing down, and we are seeing employees increasingly becoming working poor,” the statement added.
“We are currently in a situation where businesses are not able to meet their operational costs and at the same time employees are not able to make ends meet. Further, electricity cost being an input cost, Kenya’s goods and services prices remain comparatively higher in the region pushing up the cost of living.”
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