The Central Organisation of Trade Unions (Cotu) has welcomed President William Ruto's tax relief to salaried Kenyans.
In a statement, the Union's Secretary General Francis Atwoli said the move demonstrates President Ruto's commitment to lessen Kenyan's tax burden.
Atwoli said that by granting employed Kenyans with tax relief, the President had listened to Kenyans and acted on the concerns raised y Cotu.
"This timely intervention, as announced yesterday (Thursday) by the Kenya Revenue Authority, will significantly ease the financial burden on salaried workers who have in the past borne the weight of double taxation,'' Atwoli said.
Atwoli said that Cotu had, through constructive engagements, brought to the attention of the President that Kenyan workers were disgruntled about the taxation regime.
"Following constructive engagement with the President, anchored on the principles of Social Dialogue, COTU (K) brought to the attention of H.E President William Ruto that Kenyan workers were being subjected to double taxation considering the deductions for the Housing Levy and Social Health Insurance Fund were subjected to Pay As You Earn (PAYE),'' Atwoli said.
Atwoi said that the double taxation regime was eroding workers’ disposable income and reducing their take-home pay, leaving them with less to meet their day-to-day demands.
"This move is a welcome relief for Kenyan workers, as it translates to better-looking payslips and frees up additional income, thereby boosting their ability to provide for their families and contribute to the economy,'' Atwoli said.
COTU called on the government to continue embracing social dialogue as a critical tool for improving industrial relations and enhancing workers' welfare.
"Social dialogue ensures that tripartite partners, namely, workers, employers, and the government can engage collaboratively to address pressing socio-economic issues and arrive at sustainable solutions,'' Atwoli said.
Atwoli said that Cotu remains committed to advancing the rights and interests of workers across the country and fostering a harmonious industrial relations environment.
KRA had on Thursday announced that contributions to the Housing Levy and the SHIF will not be taxed twice, indicating employees will take home slightly higher pay.
In a statement on Thursday, the taxman explained that the measure will be effected following the implementation of the Tax Laws Amendment Act, 2024.
"KRA informs employers and the public that pursuant to the Tax Laws (Amendment) Act, 2024 which comes into force on December 27, 2024, the following changes shall be applicable in the computation of PAYE for December 2024 and subsequent periods," KRA said in a public notice.
According to KRA, the amounts deductible in determining the taxable employment income shall include the amounts deducted as an Affordable Housing Levy.
It will also include contributions made to the SHIF and mortgage interest not exceeding Sh360,000 annually upon money borrowed by a person from one of the first six financial institutions specified in the Fourth Schedule to the Income Tax Act.
It will also include contributions made to a registered pension or provident fund or a registered individual retirement fund up to a limit of Sh 30,000 monthly. Also included are contributions to a post-retirement medical fund limited to Sh 15,000 monthly.
In February 2023, KRA suspended all tax reliefs after establishing that certain individuals, companies, and multinationals owed the state over Sh 1 trillion due to the 'unprocedural' exemptions and refunds.
