Treasury Cabinet Secretary John MbadiTreasury CS John Mbadi has said the government has improved Kenyans' payslips.
The CS said that the tax reliefs will come into effect in the first pay slip of January.
Speaking on Monday, CS Mbadi said he defines a middle-class earner as someone who earns between Sh60,000 to Sh150,000.
“We have improved people’s payslips; it is only that sometimes we overplay this discussion around payslips getting thinner,” Mbadi said during a discussion at NTV.
Mbadi said that the new tax law is a relief to Kenyan employees.
“It is now a relief, housing levy is a relief, SHA is now a relief, it is not double taxed,” he said.
Mbadi defended the government’s tax policies, saying they are not as burdensome as critics suggest, especially for middle-income earners.
“There is this thing of saying that we are overtaxing. I have looked at the taxes because I was trying to see how I can make the payslips better,” the CS said.
In a detailed presentation seen by the Star, Mbadi broke down the tax implications for individuals earning Sh100,000 per month, a salary bracket often associated with Kenya’s middle class.
The presentation, on the state of the economy, was made to MPs during the National Assembly Mid-Term Retreat in Naivasha. Mbadi said the introduction of the Housing Levy and the Social Health Insurance Fund has been misrepresented as excessive taxation.
"Let me just take a payslip of someone who is earning Sh100,000 and take SHIF that takes from this person 2.75 per cent that if you calculate from his salary is Sh2,750 that is what used to be deducted before," Mbadi said.
"With the tax laws we brought in, in December, the effective amount we are taking from you is not Sh2,750, but it is about Sh1,925. Before in NHIF, you were contributing Sh1,700, remove that amount, and you will realise the extra amount that the government is taking from you for SHA is Sh225."
“Those who are hurt by the taxes are those that Kenyans may call earn super-salary, but when you start adding it, you don’t see it as super. But the middle class, not so much.”
The Finance minister’s remarks come amid growing public discontent over the rising cost of living and increased deductions from salaries.
Critics have accused the government of burdening citizens with multiple levies, including the Housing Levy and SHA.