COTU (K) POSITION ON THE TAX LAWS (AMENDMENT) BILL 2020

Last week, His Excellency President Uhuru Kenyatta signed into law the Tax Laws (Amendment) (No.2) Bill of 2020 ending close to eight months’ government measures to cushion salaried workers in the wake of the Covid-19 Pandemic.

This means that the tax relief measures enacted by the Government of Kenya in April to cushion Kenyans from the economic shock brought about by the Covid-19 pandemic will cease as of 1st January 2021 and, subsequently, the prices of household good will go up considering the Value Added Tax (V.A.T) will return to 16% from 14%; the corporate income tax will increase from 25% to 30% and much more disturbing and hurting is the fact that salaried workers earning above 32,333 will pay a maximum of 30% as Pay As You Earn (PAYE) tax as reported in Today’s Copy of Daily Nation.

With only 2.5% of salaried Kenyans earning above 100,000 and a majority of about 80.5% earning below 50,000, it is insensitive of the Kenyan Government to introduce punitive tax measures at a time when many workers have lost employment (as a result of the Pandemic) and are pondering on how they will manage to take their children to school when schools open in January.

As much as we understand that the government is struggling to balance between saving the economy and surviving through the pandemic (including the health crisis), we believe that there are alternative ways the government can use to meet its obligations without being insensitive to the working poor.

The government should be reminded that the reasons for which they gave these tax incentives early this year, in April, are as valid today as they were then, if not more. By reversing these measures are they saying that, as a country, we have conquered the Covid-19 pandemic? What is it that has changed since April to convince the government that Kenyans are out of the woods and that these tax measures won’t be burdensome? What are the indicators government is using?

As the umbrella workers body in the country representing over 4 Million workers, COTU (K) is totally opposed to these decisions by government and remind the government that the Kenyan workers, like the rest of the workers globally, are hurting and at pain to put food on the table. The government should, therefore, spare us any provocation through such punitive tax measures.

The National Treasury MUST be creative and innovative and ably advise both parliament and the executive on other alternative measures it can employ in order to sustain our economy. They must not always be in a rush to impose unreasonable taxes to a population that is hurting and bed-ridden as Covid-19 ravages the country and beyond.

Let Treasury learn how to balance between providing services to Kenyans with the same taxes and burdening Kenyans in the process of collection of these taxes. The Government of Kenya should not overburden its citizens, especially during these hard times.

In fact, the government must begin realizing that anybody earning below 100,000 in this country needs to be cushioned against excessive taxes and that those earning up to 100,000 and they are on the verge of retirement need even to be cushioned further by not being taxed.

Equally, and to help the government run its duties, the government must stop spending on unnecessary projects that have no immediate requirement. It is a fact you cannot kill Kenyans while telling them you are building roads for them because they need to be alive to use the same roads. The government must, especially now, learn how to be less ambitious on some of its development projects.

At the same time, KRA should embark on a radical exercise of collecting taxes from those Kenyans who have mastered the art of avoiding payment of taxes. KRA MUST stop and think of innovative ways of tax collection. Especially from those who don’t pay taxes. This is not the first time KRA has missed its revenue collection target. Therefore, they should stop using Covid-19 as a scapegoat. They should innovate and increase their efficiency.