The Kenya Bankers Association (KBA) has sharpened its push for income tax relief, clarifying that its proposed 5% reduction in Pay As You Earn (PAYE) rates should apply universally, covering not just salaried employees but also consultants, freelancers, and self employed professionals.
In a statement dated May 19, 2026, KBA urged the government to “consider a 5% PAYE reduction for all workers to strengthen the economy and create jobs by supporting growth in productive sectors such as agriculture and manufacturing.”
The proposal, presented to the National Assembly’s Finance and National Planning Committee during Finance Bill 2026 deliberations, goes further than the government’s own commitments. President William Ruto and Treasury Cabinet Secretary John Mbadi had earlier proposed exempting employees earning below Sh30,000 per month from PAYE and reducing the rate for those earning up to Sh50,000. KBA’s ask is considerably broader.
A simulation by KBA shows that a uniform 5% reduction in PAYE across all income bands would release Sh28.1 billion into the economy annually, generate Sh42 billion in immediate GDP output, create 36,000 new jobs annually, and unlock Sh140 billion in formal lending capacity.
KBA CEO Raimond Molenje explained the lending logic directly before the committee. “For every one shilling in loan, picking that number that 50 per cent of employees will access loans with increased disposable income, that comes to Sh14 billion. The Sh14 billion will be able to unlock loans within our ecosystem to the sum of Sh140 billion,” Molenje stated.
ICPAK CEO Robert Waruiru echoed the argument. “By reducing this tax rate to 30 per cent, for example, on the higher tax bracket, you are going to unlock into the economy about Sh28 billion. Once that is released back into the economy, it means we can create at least 36,000 new jobs, which is really good for this country,” he said.
The urgency is underscored by eroding real wages. Additional deductions, including the 1.5% Affordable Housing Levy, 2.75% SHIF contribution, and rising NSSF contributions, have significantly reduced real wages, which fell by 10.7% according to the Parliamentary Budget Office Report 2025.
The Finance Bill 2026, published last month, contains no PAYE relief measures, making KBA’s committee submissions an intervention as Parliament weighs the final shape of the bill.
Whether lawmakers act on the proposal remains to be seen, but the economic case being laid before them is precise, data-backed, and now explicitly inclusive of Kenya’s growing professional and gig workforce.
