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Civil servants defy Ruto's new tax plan, call on MPs to dump Bill

KUSU Secretary General Charles Mukhwaya, his KMPDU counterpart Davji Bhimji and UASU's Constantine Wasonga address a press conference in Nairobi on May 07,2023 over extreme taxation planned by the government. [Denish Ochieng, Standard]

Public service workers have rejected the proposed Finance Bill 2023, which has advanced a raft of taxes, complaining this will eat more than half of their salary and further overburden them.

In a statement signed by eight unions including Kenya Union of Clinical Officers (KUCO), the Universities Academic Staff Union (UASU) and Kenya Medical Practitioners Pharmacists Dentists Union, the public servants now want the government to reduce taxes imposed on workers.

They also demanded that the government immediately engage workers representative in the public service sector.

Speaking yesterday in Nairobi the Kenya Universities Staff Union (KUSU) Secretary General Charles Mukhwaya said workers are "being robbed" and that unions are ready to commence industrial action.

"The Finance Bill, if passed, will see a total deduction of 52 per cent of a worker's monthly earnings, leaving only 48 per cent subjected to 16 per cent VAT for every purchase of goods and services," said Mukhwaya.

"This over-taxation is going on unabated despite the fact that an employee's salary is protected by law and that any deduction therefore can only be by mutual consent or through negotiation by workers' representatives," added the KUSU SG.

"We are greatly concerned that we the workers' representatives have not been consulted on any of these levies, hence a violation of the Constitution and relevant enabling legislations," said Mukhwaya.

"We demand that Parliament rejects the proposed amendments in the Finance Bill, 2023," said Mukhwaya.

The unions called for rejecting of the proposed amendments in the Finance Bill, 2023, and reduction of taxes imposed on workers.

They also urged the government to engage in dialogue with workers' representatives in the public service sector to agree on the way forward including fast-tracking negotiations and implementation of all pending Collective Bargaining Agreements (CBAS).

"Over taxation has reached boiling point... We will unite and go on strike," said UASU Chairperson Dr Constantine Wasonga.

Tax burden

The leaders complained their members are already overburdened by taxation of public sector workers, whose salaries are deducted at source.

The workers' salaries are subjected to deductions, including the statutory National Hospital Insurance Fund (NHIF) National Social Security Fund (NSSF) Pay as you Earn (Paye), which have all been enhanced and the newly imposed Housing Fund Levy.

The Finance Bill proposes a 3 per cent deduction from workers' basic salaries to go towards the National Housing Development Fund, to which the employer will make an equal contribution to facilitate the construction of cheap houses.

This comes as the National Assembly is calling for public participation and submission of memoranda on the bill.

Yesterday, the departmental committee on Finance and National Planning placed advertisements in local dailies inviting Kenyans to submit written memorandum about their views of the proposed changes.

The National Treasury's proposed tax amendments, including the raising of turnover tax for businesses, a 5 per cent excise tax on beauty products, and a 10 per cent excise tax on cement importation.

The bill also proposes a 15 per cent tax on payments related to digital content monetisation, which will impact thousands of youths who currently earn a living from the digital space.

Further the Bill seeks to increase the pay as you earn tax for persons earning Sh500,000 and above to from the current 30 per cent of gross pay to 35 per cent.

The high cost of living has made it difficult for public service employees and Kenyans to afford basic commodities.

The opposition has from the beginning of this year staged a number of street demonstrations some of which have turned chaotic in a bid to have the government implement policies that will lower the cost of living.

Some of the demands the opposition has been demanding is the reintroduction of subsidised maize flour and petrol and diesel to mitigate against the higher costs which have risen at a time the Kenya shilling has weakened against the dollar further aggravating the situation.

The tax proposals are expected to impact the middle class, with businesses in the small and medium-sized enterprise (SMEs) category being hit the hardest. The proposed excise taxes on various products, including imported fish, powdered juice, and beauty products such as eyebrows, wigs, eyelashes and artificial nails will have a direct impact on consumers.

The Finance Bill, 2023, will be a significant factor in the upcoming budget for the 2023/24 financial year. The National Treasury aims to raise more revenues to fund the government's expenditure, but the proposed tax amendments have already drawn criticism from various quarters.

There about 900,000 public servants, including those in the civil service, teachers, parastatal workers and those working for companies majority-owned by the State.

These workers have a wage bill of over Sh900 billion, which goes toward payment of salaries and allowances as well as pension liability, as more employees retire from the civil service and life expectancy increases.

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