Some relief for low-income workers as State moves to lessen tax burden
By Moses Michira | January 4th 2017
Workers will enjoy a tax relief starting this month that will add some little money into the pockets of low-income earners.
This follows a review of income tax regulations that, apart from raising the lowest taxable monthly pay to Sh11,181, also increases an employee's relief by Sh118.
Messengers, security guards and cleaners are among the beneficiaries of the new regulations announced last year but which take effect this month.
In effect, anyone earning Sh12,300 a month will pay only Sh6 as tax, which can be considered the minimum tax-free pay.
"The purpose of this notice is therefore to advise the employers, employees and other individual taxpayers to implement the above changes while computing the taxes for periods beginning January 1, 2017 and beyond," Kenya Revenue Authority (KRA) said in a notification.
A security guard who shared his payslip with The Standard said his monthly salary was raised by only Sh100 in 2015.
Monthly earnings above Sh10,164 have been subjected to taxation on a graduated scale starting from 10 per cent. All workers were however granted a personal relief of Sh1,162 a month, which has now been raised to Sh1,280. For the thousands of workers in the lowest-income bracket, the relief could be significant in easing their already stretched household budgets.
Those earning a Sh15,000 monthly salary, for instance, will from this month pay Sh411 in income taxes, down from Sh579. The net effect of the new guidelines is Sh168 more to the employees, many of whom opt to either walk or cycle to work, rather than use matatus. Thus, the relief could mean two or more meals.
KRA last reviewed the taxation schedule in 2005 where the personal relief was raised from Sh1,056. But the price of basic commodities has risen rapidly in the past 12 years, making a mockery of the relief which is informed by the need to ease the cost of living for salaried workers.
A packet of maize flour has more than doubled to about Sh110. Maize flour is easily the best indicator of the cost of living considering Ugali is the meal of choice for most families.
Treasury CS Henry Rotich said the relief, however small, would make a big impact for low-income households. "It is pro-poor and progressive," Mr Rotich said in an interview yesterday, adding, "Further reforms are being undertaken in the context of the new Income Tax Bill that is being finalized."
High-income earners, said the CS, would also enjoy a bigger relief which is however much smaller as a proportion of their salaries. He, however, did not reveal the contents of the envisioned legislation on taxation of personal income as he was out of the country.
However, Kenya Union of Domestic and Hotels, Educational Institutions, Hospitals and Allied Workers Secretary General Albert Njeru was quick to dismiss the relief as "too insignificant" to the ordinary worker.
High costs of cooking oil, fuel and power make life unbearable
- Local cement firms eye own clinker production to cut costs
- Extension of Sh3.5b meter-gauge railway line complete
- How healthy living has turned ginger into a goldmine for farmers
MONEY & MARKET
- State boosts local vehicle assembler with military deal
- Cost saving tactics to survive harsh economic times
By Peter Theuri