Africa-Press – Kenya. Treasury Cabinet Secretary John Mbadi has proposed exempting Kenyans earning Sh30,000 and below from Pay As You Earn (PAYE) tax.
The move, still subject to parliamentary approval, is aimed at easing the cost-of-living burden on low-income earners.
Speaking during the People’s Dialogue Forum in Meru, Mbadi said the government will not introduce additional taxes and is instead pursuing measures to reduce taxation while cutting reliance on excessive borrowing.
“What happens is that we will not tax you more. What happens is that we don’t want to take excessive loans going forward. But we will not tax you more. In fact, we are now thinking of reducing taxes,” Mbai said on Monday.
The Treasury CS said the decision on the proposal had been reached following consultations with President William Ruto, who directed him to urgently take the proposal to Parliament.
“Let me announce this here: We have agreed with President William Ruto that low-income earners in this country should be given a reprieve.”
Under the proposal, all salaried Kenyans earning Sh30, 000 and below would be exempted from PAYE.
He noted that Kenya has about 3,065,165 salaried workers, out of whom approximately 1.5 million earn Sh30,000 and below.
“Any Kenyan earning Sh30, 000 and below should not pay Pay As You Earn. You pay zero. We have said the government should come for my money and leave the person earning Sh30, 000 alone,” Mbadi said.
“I am not even waiting for the Finance Bill to come in June. I am taking a Tax Laws (Amendment) Bill to Parliament. Once Parliament resumes, we are preparing that bill and will take it to Parliament for approval.”
In addition, Mbadi said the Ministry plans to reduce the tax rate for those earning between Sh30,000 and Sh50,000.
Mbadi said the current 30 per cent rate, which applies to incomes starting at about Sh33,000, would be lowered.
“We are reducing that bracket between Sh30,000 and Sh50,000 to 25 per cent. That is a reduction of five per cent,” Mbadi added.
Under the new structure, an individual earning Sh50,000 would pay no tax on the first Sh30,000, while the remaining Sh20,000 would be taxed at 25 per cent.
“We are trying to put some money in your pocket because many Kenyans are complaining that they don’t have money to buy things and demand is shrinking,” Mbadi said.
He said the proposed changes would benefit about 244,000 additional workers, bringing the total number of Kenyans receiving tax relief to roughly 1.7 million.
At the same time, Mbadi said the government would intensify efforts to bring more non-salaried and informal earners into the tax net to ensure fairness.
“If you are making Sh100, 000 just because you are not on payroll, you should not run away from paying tax, yet you are also using roads like salaried people,” he said.
The Treasury CS said the Kenya Revenue Authority would rely on systems rather than force to expand compliance.
“Taxation is not military. KRA will use systems and tell you: we have seen you, start paying tax,” he said.
