The Federation of Kenya Employers (FKE) has called on the government to review several statutory deductions, including the Housing Levy, arguing that the tax burden is heavy for Kenyans, affecting their productivity and business sustainability.
FKE is proposing a cap on the payment period for the tax, saying it is among the many statutory deductions that have significantly reduced workers' take-home pay.
Speaking in Kisumu during the FKE annual general meeting on Thursday, FKE CEO Jacqueline Mugo said that the numerous deductions are making employers struggle with complying with the 2007 Employment Act, which prohibits them from deducting more than two-thirds of an employee's gross salary.
"In many instances, employers have to look at where they can help the employees or remove some of the non-statutory deductions. With the current level of deductions, businesses are under immense pressure, and employees are left with limited disposable income,'' Mugo said.
While acknowledging the government’s efforts in addressing the housing deficit, FKE, the national umbrella body for employers, has called for engagements with the government and discussions on how they can review the levy to reduce the burden on Kenyans.
''There is an urgent need for a national dialogue on taxation and wages. If there is any way in which the level of contribution can be reviewed and also if you can put a cap on the period for which that payment is done,'' Mugo told the government.
The CEO assured Kenyans that the body would engage with the government on the taxation dialogue for the benefit of both the people and business sustainability.
Currently, Kenyans are contributing 1.5 per cent of their gross monthly salary towards the Affordable Housing Levy, with employers also contributing an additional 1.5 per cent of the employee’s salary.
The levy applies to all individuals earning an income in Kenya, including self-employed persons, who must remit 1.5 percent of their gross income.
According to President William Ruto, the main aim of the levy, which has been widely contested by Kenyans, is to mobilize funds for the construction of affordable housing units across the country, addressing the nation's housing crisis.
Despite their concerns, employers maintained that they were not against compliance but insisted that the tax system should strike a balance between business sustainability and workers’ welfare.
Discussions are already underway with the National Treasury, where FKE revealed that the Treasury acknowledged the challenges. Engaged parties are working together to find solutions that are beneficial for both businesses and employees.
