Finance Bill: Stakeholders Push for 30% PAYE Cap
Stakeholders in the private sector, including bankers and accountants, are urging Parliament to amend the Finance Bill and cap pay-as-you-earn (PAYE) taxes at 30 per cent across all five tax bands. The proposed change, they argue, would stimulate economic growth and generate Sh28 billion in revenue.
The call for a PAYE cap comes as Parliament continues to debate the Finance Bill, which outlines proposed tax measures for the upcoming fiscal year. Currently, PAYE rates vary across different income brackets, with higher earners facing significantly higher tax rates.
Advocates for the change contend that a flat 30 per cent PAYE rate would provide greater certainty and predictability for both employers and employees. This, they believe, would encourage investment, boost consumer spending, and ultimately lead to increased government revenue, despite the lower rate.
The Sh28 billion figure cited by stakeholders represents the projected revenue increase they anticipate from the proposed PAYE structure. Their reasoning is that the reduced tax burden would incentivize more people to seek employment and increase overall economic activity, offsetting the lower tax rate.
The Finance Bill is currently undergoing scrutiny in Parliament, with various stakeholders presenting their views on the proposed tax measures. The debate surrounding PAYE is expected to be a key point of contention, as lawmakers weigh the potential economic benefits against concerns about fairness and equity in the tax system. The outcome of this debate will significantly impact the financial landscape for both individuals and businesses in the coming year.
