Civil servants union urges gov’t to review PAYE deductions
By Kepher Otieno, December 27, 2023As Kenyans bid bye to 2023, the Union of Kenya Civil Servants (UKCS), wants the state to reduce taxes imposed on salaried workers.
The government employees protest that the 30 per cent tax increase in Pay as You Earn (PAYE) has overstrained the workers.
UKCS Secretary General Tom Odege, while addressing the press in Kisumu, earnestly appealed to the government to review the PAYE deductions in the new year 2024.
“We particularly want the Housing Levy removed because we deem it unnecessary. It’s hurting workers,” Odege stated.
The Finance Act 2023 sets the PAYE rate at 32.5 per cent for persons earning between Ksh500,000 and Ksh800,000 a month.
On the other hand, state employees earning above Ksh800,000 are subject to a 35 per deduction in PAYE.
This combined with a new housing tax of 1.5 per cent levied on state workers and a medical insurance tax of 2.5 per cent significantly reduces their net income.
“This is why, we are asking the government passionately, with all sense of humility to review the taxes downward,” Odege said.
But he ruled out calls for an industrial strike any time soon, instead saying they will use more diplomatic ways to protest high taxes.
“We want the state to stop this inkling of listening to unrests as the trigger for action on most pressing administrative issues,’’ he added.
Odege claimed that the unprecedented tough economic times in the government had seen many workers resort to survival tactics.
The civil servants union, however, warned that if diplomatic negotiations fail, the ‘very last resort’ could be industrial action.
Odege told the press in Kisumu, that it was saddening that the state was quick to increase taxes but slow to increase their salaries.
The state targets collections from income tax, mainly PAYE and corporate income tax paid by traders to increase by Ksh194.2 billion to Ksh1.2 trillion in the next two financial years.
“The reason we experience workers running away from government to the private sector is because of poor pay,’’ he said
Odege, who is also a member of parliament for Nyatike constituency, noted that they have nowhere to hide since their salary is paid and deducted by the state at will.
In August last year, the Salaries and Remunerations Commission (SRC) chairperson Lyn Mengich, announced a seven per cent to 10 per cent increase in civil servants’ salaries.
The increase was aimed at cushioning government workers against inflation, but Odege downplayed the pay increase.
According to the MP, as things stand, the public servants lose up to 60 per cent of their income to taxes and levies.
“This is after the introduction of the housing levy, new PAYE rate, National Social Security Fund (NSSF) and National Health Insurance Fund (NHIF) deductions,’’ he revealed.
Consequently, Odege said the pay increase was not being felt due to increased tax on PAYE and the high cost of living.
He stated that the pay increase resulted in a double taxation of workers’ salaries, ultimately reducing their take-home pay significantly.
Trouble started after the doubling of the tax on petroleum products, from 8 to 16 per cent early this year.
This led to the sudden surge in prices of goods and services thus pushing President Ruto’s administration into tough decisions.
In the last one and four months in office, Ruto’s regime’s higher tax on petroleum products has been expressly very controversial.
The previous administration, where he also served, avoided raising it by introducing subsidies to cushion consumers.
UKCS observed that President Ruto campaigned on a platform of reducing the cost of living but what they were seeing is the reverse of his campaign promises.
While seeking election, he accused former President Uhuru Kenyatta of letting food costs ‘skyrocket’.
“We knew he would do better than his predecessor, but we are yet to see this happen. Instead, more taxes and more tax,’’ Odege added.
Ruto insists that he increased taxes as the only way to reduce borrowing for a government struggling with a public debt of Ksh9.4 trillion.
Kenya is currently classified by the World Bank on high-risk ends because of debt distress.
UKCS, Odege said, will rethink this in 2024 by exploring the best actions to overcome the ripple effects of the high tax regime.
Today, salaried workers pay between Ksh150 and Ksh1,700 depending on their monthly pay, at a flat rate of 2.7 per cent.
Already, employers have started implementing the new NSSF rates where staff earning between Ksh18,000 and Ksh25,000 part with Ksh880 a month.
The revised rates for the band have seen deductions for NSSF rise to the Ksh1,080 upper limit from the current Ksh200. This contribution is matched by the employer.