NAIROBI, Kenya, July 2 – Treasury Cabinet Secretary John Mbadi has assured Kenyans that the government remains committed to reducing Pay As You Earn (PAYE) tax despite delays in implementing the proposal.
Speaking during a Citizen TV interview, Mbadi said the proposal to lower PAYE originated from the government and discussions on its implementation will begin immediately.
“This suggestion about Pay As You Earn actually came from the government, this proposal. And we are going to put across to Kenyans. In fact, that is one of the assignments I’m going to start on immediately, on the discussion on how to reduce taxes on Pay As You Earn,” Mbadi said.
“And we are committed as a government to do this. So it is not that we are ignoring Kenyans. We are going to make sure it is actualized.”
Mbadi said the proposal will be subjected to public participation before being introduced through legislation.
The government’s proposal seeks to exempt employees earning Sh30,000 and below from paying PAYE, while reducing tax rates for those earning up to Sh50,000 to help cushion low-income earners from the high cost of living.
Meanwhile, the Kenya Bankers Association (KBA) has proposed a five percentage-point reduction in PAYE across all income bands, alongside a cap of 30 percent for the highest tax bracket.
The lobby says the proposal would inject an estimated Sh28.1 billion into salaried workers’ pockets, boost consumer spending, create about 36,000 jobs annually, and increase economic output by Sh210 billion.
