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Civil servants cry foul over PAYE deductions

Brenda Murungi by Brenda Murungi
December 28, 2023
in News
Reading Time: 2 mins read

The Union of Civil Service (UKCS) secretary general, Tom Odege, wants the government to reduce taxes imposed on salaried workers. With the doubling of the tax on petroleum products from 8 to 16 percent early this year, employees have been on the receiving end of heightened taxation and a significant decrease in their net pay.

While addressing the press in Kisumu, Odege appealed to the state to review the PAYE deductions as government employees protested that the 30 percent tax increase in Pay as You Earn (PAYE) has overstrained them.

The deductions range from the introduction of the housing levy to the new PAYE rate, the National Social Security Fund (NSSF), and the National Health Insurance Fund (NHIF).

In February this year, deductions to the National Social Security Fund (NSSF) rose fivefold after a landmark ruling upholding the 2013 NSSF Act, which saw pension contributions raised to 12 percent of pensionable wages.

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The passage of the 2023 Finance Act also saw two notable changes affecting salaried employees, including the introduction of the housing levy, set at 1.5 percent of gross salaries and payable by both the employee and the employer.

The introduction of the housing levy has received the greatest pushback from workers, who have faulted the model of implementing the affordable housing program via taxation and levies.

“We particularly want the housing levy removed because we deem it unnecessary. It’s hurting workers,” Odege stated.

The act also introduced two new higher Pay-As-You-Earn (PAYE) bands, covering incomes of between KES 500,000 and KES 800,000 at 32.5 percent and income exceeding KES 800,000 at 35 percent.

His plea comes at a time when the taxman targets collections from income tax, mainly PAYE and corporate income tax paid by traders, to increase by KES194.2 billion to KES1.2 trillion in the next two financial years.

The Union of Civil Servants also observed that President Ruto campaigned on a platform of reducing the cost of living, but instead they have received blow after blow with high taxes and increased costs of living.

 

 

 

 

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