Everything you need to know about the new Tax Gov’t introduced last week

mary kulundu

June 20, 2018 8:24 AM

The National Housing Fund

National Treasury Cabinet Secretary Henry Rotich caused an uproar among Kenyans after announcing that a new tax will be levied on those in formal employment.

The new tax, which will be contributing to the National Housing Fund, is meant to finance President Uhuru Kenyatta’s Big Four plan in a bid to provide affordable housing.

On Tuesday, a Bill indicating that Kenyans will get one percent cut off their salaries caused confusion with many complaining that the Government was taxing them from all angles.

According to the Bill, employers will also pay the one percent of the employee’s monthly gross emoluments once Parliament approves it.

However, CS Rotich made a clarification on the Bill widely circulated on social media noting that there was an error.

The Treasury minister stated that employees are only meant to pay 0.5 percent of their salaries which will go to the National Housing Fund.

"The right rate is the one in the Budget statement. The error will be dealt with in Parliament, where we will harmonize what is in the Bill and what is in the Budget speech," he said.

In his budget statement, Rotich noted that tax will go up to a maximum of Sh5,000 to those earning Sh1 million and above.

What the tax means is that if you are earning a salary of Sh70,000, you will be deducted Sh350 per month.

In a report by the Nation, the CS further divulged that the houses constructed using the funds will be given priority to those who contribute.

"In terms of priority, the first ones in line to get the affordable housing will be the contributors. This is how it works in other countries… we will thereafter determine whether the contributors will access (the houses) on the first-come-first-served basis or use a lottery system as it happens in Ethiopia," he was quoted by the paper as saying.

mary kulundu