Tax Bands Kenya: It is going to be a tough 2021 for all Kenyans who earn Sh. 32,333 and above. This is because the government, which is currently broke, will take 30 per cent in taxes from any earnings above Sh. 32,333.
According to a report that appeared in the Daily Nation on Thursday, this will be done through hidden taxes that have already been signed into law by President Uhuru Kenyatta.
“The National Treasury has revised the tax bands for salaried workers, which will see them pay a maximum 30 per cent tax on any earnings above 32,333,” the report says.
The report says that prior to the coronavirus pandemic, “the 30 per cent maximum tax was being charged on amounts above Sh. 74,000.”
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This means that nearly half of all formally employed Kenyans who earn about Sh. 30,000 will now be subjected to this tax band.
However, the report says that the National Treasury has defended the move by arguing that despite this increase, Kenyans won’t pay higher taxes. The Treasury reasons that the Pay As You Earn (PAYE) is still being subjected to a tax relief of Sh. 28,800 from Sh. 16,896. However, the Treasury was not clear on how long this relief may last, which means that should it be terminated, the government may take over a quarter of what Kenyans in this bracket earn every month.
The new tax measures are the latest indication that President Uhuru Kenyatta’s government has run broke despite borrowing trillions in loans. In the month of December, the government was not able to pay workers on time.
Incidentally, from January, workers will also take home reduced salaries. Teachers, police officers and all civil servants in Kenya are set to take home reduced salaries. The more than 530,000 civil servants will in January 2021 have their take-home reduced by 7.5 percent.
The employees attached to ministries and State agencies will see a portion of their salaries sliced for onward remittance to the soon to be created Public Service Superannuation Scheme (PSSS). This means that State workers will cede about Sh. 2.4 billion monthly or Sh. 28 billion to the fund that will emerge as Kenya’s largest pension scheme. Tax Bands Kenya.