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Kenya: Public Workers Threaten Industrial Action Over Govt Taxation Proposals

Nairobi — Public Sector Trade Unions have threatened to call for industrial action if the proposed taxation in the Finance Bill is enacted into law.

In a statement read by Kenya Universities Staff Union Secretary General Charles Mukhwaya, the unions said they are concerned that the average public sector worker is already over-taxed.

“We are urging Parliament to reject the proposed amendments 2023, we are also urging the government to reduce taxes imposed on workers and we call upon the government to immediately engage representatives of workers unions to agree on the best way forward,” he stated.

Mukhwaya said the Kenyan economy is facing many challenges, including soaring inflation and a high cost of living which, the government is yet to tackle them.

“The Finance Bill 2023, if passed the way it is, will see total deductions of upto 22 percent of one’s monthly earnings, with the remaining 48 percent still subjected to 16 percent VAT of all goods and services bought, whose prices are ever increasing. The rising cost of living makes a public service employee a slave who cannot afford a decent life,” he said.

COTU Secretary General Francis Atwoli has advised the government to be cautious in its approach to tax hikes, stating that they can be counterproductive.

The Treasury last week submitted the Finance Bill 2023, to the Parliament where it is proposing changes to the Employment Act to allow deductions of three percent from employees’ basic pay to help fund President William Ruto’s ambitious plan to build low-cost homes.

Treasury CS Njuguna Ndung’u has, however, capped the proposed deductions, which will be matched by employers, at Sh5,000 in what is largely a reintroduction of a policy rejected during retired President Uhuru Kenyatta’s administration.

The Finance Bill 2023 also proposes a raft of taxes that will have a major impact on Kenya’s digital content creators and owners of platforms that facilitate the trading of digital assets.

The proposal includes a 15 percent withholding tax on payments related to the monetization of digital content, which will significantly impact the thousands of young people who make their living in the digital space.

Also, any person who receives rental income on behalf of the owner of the premises shall deduct tax and within 24 hours remit the amount to the taxman.

The Finance Bill 2023 is also seeking to introduce a tax on human hair, eyelashes, switches, and artificial nails in a move that will raise the prices of these beauty products whose usage is on the rise.

Proposed new taxes introduced include Sh100,000 per metric tonne of imported fish or 20 percent of the value, whichever is higher.

Powdered juice will be taxed at Sh25 per kilogramme while sugar, excluding that imported or locally purchased by a registered pharmaceutical manufacturer, will attract a Sh5 tax per kilogramme.

Items such as wigs and false beards and eyebrows, which are mostly imported, have grown in popularity.

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