FKE calls for the review of tax regime to protect businesses
By Kenya News Agency, May 16, 2025The Federation of Kenya Employers (FKE) is urging the government to ease the tax burden in the 2025/2026 budget cycle, warning that continued pressure on employers may force businesses to downsize their workforce.
FKE CEO Jacqueline Mugo says they have presented a raft of proposals to the Cabinet Secretary of the National Treasury, calling for a comprehensive review of the tax regime, noting that employers are struggling to meet the demands of the Employment Act, 2007.
“We looked at the total range of statutory deductions that have been introduced and requested that they be based on the basic pay as opposed to the consolidated pay because we think that will alleviate the level of cash that is flowing out of people’s payrolls,” Mugo said.
Housing levy reduction
FKE is also proposing the reduction of the housing levy from the current 1.5 per cent to 0.5 per cent of the total earnings.
“We know a good amount of money has been raised already to cover the housing aspirations of the government,” the CEO stated.
She affirms that they support reforms aimed at reducing the tax burden on citizens and businesses.
“We agree with the public discourse indicating that the current situation is not sustainable, as it has made life very difficult for ordinary citizens. It is in the public domain that most Kenyans and the business community look to the government to alleviate their suffering,” said Mugo.
“We hope that the policies that will be proposed by the National Treasury, especially in the 2025/2026 Budget, will change this perception,” she added.
Mugo made the remarks in Mombasa during the 64th Annual General Meeting (AGM) of the FKE Coast Branch, held under the theme “Thriving Businesses in a Shifting Environment.”
The CEO acknowledged that the government has made efforts to improve the business climate, though the results have been mixed, citing commendable progress in the tourism and hospitality sectors, driven by the post-COVID-19 recovery activation plan.
“To sustain these gains, FKE urges the government to liberalise further travel, including visa-free entry for transit passengers and visitors staying less than 96 hours, and to enhance air access into Kenya.”
Road connectivity
FKE also lauded the government for improving road connectivity in the Coast region through mega projects like the Dongo Kundu bypass project and the ongoing upgrade of the Mombasa-Malindi Road.
To ease persistent congestion and enhance the efficiency of trade and transport, they urged the government to fast-track the construction of the Mombasa–Nairobi Road.
FKE also expressed their concerns on the ban on Kenyan tea imports imposed by the government of Sudan in March.
“This unilateral action has caused losses estimated at Ksh2.4 billion, with tea stuck at Port Sudan, on vessels en route, or warehoused in Mombasa. We call on the Government of Kenya to engage Sudan urgently and diplomatically to resolve this issue and restore market access,” Mugo said.
They also appealed to the Mombasa County Government to reduce the Ksh7,000 cess per truck, saying they are burdening the tea value chain.
“This fee acts as a non-tariff barrier, in direct violation of the East African Community (EAC) trade protocols,” Mugo stated.
They also faulted the transit bond requirements imposed on teas from neighbouring countries sold via the Mombasa Tea Auction, creating unfair trade barriers and risking undermining Mombasa’s competitiveness as a regional trade hub.
To resolve logistics bottlenecks on weekends occasioned by delays in disarming cargo container seals by KRA officers, FKE calls for the immediate deployment of round-the-clock customs support to ensure continuity of cargo movement and reduce business losses.
In the wake of the imposition of new tariffs by the USA, FKE exhorts the government to pursue and strengthen preferential trade agreements with other countries.
“This is particularly urgent considering the tariffs recently imposed by the U.S. government and growing restrictions from other trading partners. Strategic international trade engagement is essential to safeguard market access, enhance competitiveness, and protect the livelihoods tied to export-driven industries in the region,” the FKE CEO said.