KNBS uncovers 230,935 workers earning Sh100,000 monthly unknown to the state
KNBS uncovers additional 230,935 workers earning Sh100,000 monthly unknown to the government
KNBS uncovers additional 230,935 workers earning Sh100,000 monthly unknown to the government.
Kenya has unearthed an additional 230,935 workers making more than Sh100,000 per month who were not included in earlier official figures, sparking concerns that businesses may have been under-declaring their payroll and withholding taxes from the Kenya Revenue Authority (KRA).
For the four years leading up to 2020, the Kenya National Bureau of Statistics (KNBS) has updated the wage information for 2.9 million Kenyans working in the official sector.
According to a source at the KNBS, the companies have been underreporting several standard benefits when stating their employees’ wages, which has led to the modification of the salaries data.
With the change, the number of those making more than Sh100,000 per month has increased from 79,909 in 2020 to 310,884, leaving out almost 230,000 top earners whose companies have been underreporting their income.
Last year, the number of workers earning over Sh100,000 jumped 15 percent or 48,000 more to 358,833.
This represented 12.37 percent of the total workforce, a share that analysts reckon nearly matches Kenya’s consumption patterns.
In 2020, the under-reported figures showed that the share of those earning over Sh100,000 stood at 2.7 percent of the formal sector workers.
The measly 2.7 percent pointed to a larger share of high-income earners whose lifestyles are not in tandem with the taxes they pay or their declared income.
The KRA had consistently questioned the data, arguing that only a few Kenyans have officially registered as belonging to the high-income earners’ bracket despite the growth in conspicuous consumption in regions such as Nairobi.
The taxman reckons there are workers who earn extra cash from ventures such as real estate, dividends, and royalties but fail to declare the additional income.
The KRA has struggled to bring more people into the tax brackets and curb tax cheating and evasion in the quest to meet targets in an economy where government income has consistently failed to meet targets.
The statistics body mainly relies on questionnaires sent to companies when collecting the wage data—with a small input from the KRA— suggesting that firms are now coming clean on the actual amounts they are paying employees.
The KRA says a sharp increase in imports of luxury items and multi-million shilling investments in real estate have jolted it to a potentially massive tax leakage, which if tapped could yield billions of shillings in additional revenues to the Exchequer.
In both the old and revised data sets, the total number of Kenyans in the formal workforce remained largely unchanged at 2.74 million, indicating that the sharp changes in the wage brackets were due to revisions in declared earnings rather than new entrants coming into the workforce.
The revised data for 2020 shows a sharp drop in the number of workers earning less than Sh50, 000 by 862,805 to 1.17 million.
The number of those earning between Sh50, 000 and Sh99, 000 rose by 633,368 to 1.25 million.
The rise in the number of those earning over 100, 000 by 15 percentage points to the continued recovery of the economy in the post-Covid-19 period.
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