The Kenyan government has proposed a 35 per cent tax on the salaries of persons earning gross monthly income of at least Ksh500,000 ($3,660).
The proposal, if approved by Kenya’s Parliament, will see a longstanding law on taxes changed.
The Kenya Revenue Authority (KRA), which collects taxes, currently deducts a maximum of 30 per cent from employees’ salaries.
There are less than 100,000 formally employed Kenyans who are earning more than Sh100,000 ($735) monthly, government data shows.
The nation, which has a population of about 50 million people, has slightly below three million people in formal employment.
The Treasury ministry, through the Finance Bill 2023, is also seeking to channel 3 per cent of employees’ gross salaries to the National Housing Development Fund. This deduction will be matched by another 3 per cent by the employer.
In the proposal, Kenyans who qualify to buy cheap houses built by the government will see their contributions channelled towards eventually purchasing the house.
Those who don’t qualify for affordable government houses will have the option of diverting the contribution to their retirement savings scheme or to their children and spouses, or withdrawing it in cash after seven years.
The proposals have to be approved by Members of Parliament and assented to by President William Ruto for them to be implemented.
Kenyans on social media expressed mixed reactions to the proposals, with many faulting the government for burdening the citizens with heavy taxes.
A 2023 report by the World Population Review indicated Kenya ranks at position 19 in Africa among most taxed citizens on the continent.
