Government proposes measures to ease burden on low-income earners

Taxpayers will benefit from another 10 per cent increase in income tax bands and personal relief in a raft of measures proposed by the government to ease the burden on low-income earners.

National Treasury Secretary Henry Rotich said the increase in tax bands was informed by the need to boost the take-home pay of low-income earners.

Last year, a similar review was done and took effect in January, offering workers up to Sh600.

At the moment, the lowest band starts at Sh11,180 per month while the upper band falls on incomes from Sh42,782 per month. It is from the upper band that the maximum 30 per cent tax rate is applied.

Under the proposed changes, workers will only pay taxes if their income is at least Sh13,486 per month, with the upper band falling on incomes above Sh46,960 per month. That means incomes of Sh13,486 per month will attract taxes at 10 per cent, the portion beyond the first band will attract taxes at 15 per cent up to Sh23,886 per month, up from the current Sh21,715

The portion of incomes beyond the second band up to Sh36,473 will be taxed at 20 per cent, with the rates rising to 25 per cent on incomes up to Sh46,960 per month.


Any portion of income above the Sh46,960 falls in the uppermost band that will attract the top tax rate of 30 per cent.

The changes will also see personal relief going up by 10 per cent, from the current flat rate of Sh1,280 per month.

“This measure will, to a large extent, increase the take-home income of a majority of low income earners,” Mr Rotich said.

“I wish to confirm that the exemption of bonuses, overtime and retirement benefits paid to the low-income earners will remain.”

The tax relief comes as flat or declining sales, coupled with growing concern over the August General Election has left dark clouds hanging over the labour market, forcing the majority of employers to freeze plans to hire or raise workers’ salaries, a newly-released report says.

The job market survey, commissioned by the Institute of Human Resource Management, found that 73 per cent of employers across 12 sectors have stopped hiring.

More than 57 per cent of the firms also indicated that they will not increase employees’ pay this year while the remaining 43 per cent will marginally adjust salaries to compensate for inflation.

Consumer prices rose by 9.04 per cent, the highest inflation rate since June of 2012

The study found that reduced private sector credit uptake and the freeze in expansion by investors awaiting poll outcome.

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