Unemployment Insurance Fund: Employed Kenyans could soon be required to pay a two percent tax from their incomes to cushion the unemployed.
This new tax is part of new government plans in the next two years. According to a report that appeared on Royal Media Services Citizen, the proposal contained in the National Treasury post COVID-19 economic recovery strategy.
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The new tax will inevitably increase taxation for employed Kenyans who already account for a number of other statutory deductions. It will also come amidst fears of additional tax recommendations from the IMF and World Bank following Kenya’s application of a new loan of Sh. 400 billion. Once taxed, these monies will go to the unemployment insurance fund (UIF) which is now being set up.
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“The government will establish a UIF to cushion workers in financial distress by providing them with short-term relief when they become unemployed, or are on unpaid leave or unable to work because of illness,” the National Treasury said. “The amount of contribution to the fund with be two per cent which include one per cent paid by employees from remuneration paid and one per cent paid by the employers.”
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According to the Citizen report, the Planning Ministry along its development partners is expected to sink in a total of Sh. 300 million to the fund across the next two fiscal years to June 2022. The first tranche of Sh. 100 million is expected to be sunk in the financial year ending in June next year.
“The UIF is seen as part of the solution to Kenya’s endemic unemployment which has been worsened by the COVID-19 pandemic,” the report said.
