The National Treasury will begin nationwide public participation in August on proposals to reduce Pay As You Earn (PAYE) tax, with Cabinet Secretary John Mbadi assuring workers that the planned tax relief is still on course.
Mbadi said the month-long exercise will gather views from Kenyans before the government settles on the final proposals to ease the tax burden on salaried employees.
“I know the concern has been on the payslip. Some of you thought we have shelved that idea. We haven’t,” Mbadi said.
The Treasury’s initial proposal seeks to exempt employees earning Sh30,000 and below from PAYE, while lowering the tax rate for those earning between Sh30,001 and Sh50,000.
However, Mbadi said the government will also consider alternative proposals submitted by stakeholders during the public participation exercise.
One proposal by the Kenya Bankers Association (KBA) recommends cutting PAYE rates by five percentage points across all tax bands and capping the highest tax rate at 30 percent.
The bankers’ lobby estimates the changes would leave workers with an additional Sh28.1 billion in disposable income each year, create about 36,000 jobs annually and increase Kenya’s economic output by Sh210 billion.
Mbadi said he will travel across the country throughout August to collect public views before presenting a report to President William Ruto at the end of the month.
“By the end of August, and we have agreed with the President, I bring back the report. We will table legislation in September so that Kenyans get some relief on their payslips,” he said.
If approved by Parliament, the proposed reforms would reduce the tax burden on salaried workers and increase their take-home pay.
