The Central Organisation of Trade Unions (COTU) has criticized the government for ending tax relief measures that cushioned salaried workers following the outbreak of the coronavirus pandemic.
In a statement, COTU Secretary-General Francis Atwoli said it is insensitive of the government to introduce punitive tax measures at a time when many workers have lost jobs due to adverse effects of the pandemic and are pondering on how to take their children to school on January 4 when schools reopen.
“….prices of household goods will go up considering that VAT) 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 Ksh32,333 will pay a maximum of 30% as PAYE tax…” Atwoli said yesterday.
COTU (K) POSITION ON THE TAX LAWS (AMENDMENT) BILL 2020.
— Francis Atwoli NOM(DZA),EBS,MBS, CBS. (@AtwoliDza) December 31, 2020
President Uhuru Kenyatta signed the law reversing tax cushions on December 23, 2020, amid criticism from many Kenyans. The new measures took effect today.
The Tax Laws (Amendment) Bill 2020 was passed by the National Assembly despite the outcry from Kenyans with the lawmakers being accused of insensitivity.
However, the government will continue cushioning low-income earners by retaining the 100% tax exemption relief for those earning a monthly income of Ksh24,000 and below.
Atwoli said that reversing the tax measures will affect many households as only 2.5% of salaried Kenyans earn above Ksh100,000 and a majority of about 80.5% earning below Ksh50,000.
“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,” he added.
The vocal trade unionist stated that the government should be reminded that the reasons for which they gave the tax incentives 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?” Atwoli posed.
The union is now demanding that the National Treasury advise Parliament and the Executive on other alternative measures it can employ in order to sustain the economy.
“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,” COTU said.
“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 union further called on the Kenya Revenue Authority (KRA) to put in place better measures to deal with tax cheats.
“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,” COTU said.