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Kenyan employers warn of job cuts and increased business costs over new housing tax

The new tax plan will help increase home ownership by Kenyans across the country.

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The employers' body said that the move will increase the cost of doing business as well as lead to job cuts.

"The proposed changes increase labour costs for employers and cost of living to employees without any guaranteed benefits to them,” Federation of Kenya Employers President, Mark Obuya said.

FKF said the proposal does not indicate whether the contribution will be in addition to the housing allowance they currently offer employees nor specify the role that employers and their workers will play in managing the Housing Fund.

0.5 per cent

Under the new proposed tax plan, the employer will contribute 0.5 per cent of the employee’s gross monthly salary subject to a maximum of Sh5,000 while the employee will contribute 0.5per cent of their monthly gross earnings.

The maximum amount will be Sh5,000 with the employee expected to contribute 0.5 per cent of his/her monthly gross earnings.

The new tax is meant to finance President Uhuru Kenyatta’s Big Four plan in a bid to provide affordable housing.

FKF said it will consult the parliamentary committee on Labour in the hope of reaching an amicable solution.

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