Finance Bill: Stakeholders Push for 30% PAYE Cap
Private sector stakeholders, 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 proposal, put forward during stakeholder consultations, aims to alleviate the tax burden on employees and stimulate economic growth.
The group argues that a 30 per cent PAYE cap would generate Sh28 billion, a figure they believe demonstrates the potential economic benefits of the change. Currently, PAYE rates vary across the five tax bands, with higher earners facing significantly higher rates. Stakeholders contend that the current system disproportionately impacts middle-income earners and discourages investment.
The Finance Bill is currently under consideration by Parliament and is expected to undergo further revisions based on stakeholder feedback. The bill outlines a range of tax measures aimed at increasing government revenue and addressing the national debt. The proposed PAYE cap is one of several key points of discussion during the consultation process. Details regarding the specific impact on each tax band were not provided, however, the stakeholders emphasized the need for a more equitable and predictable tax system.
The call for a PAYE cap comes amidst ongoing debates about the fairness and sustainability of the country's tax policies. Economists have offered varying perspectives on the potential consequences of such a change, with some raising concerns about the impact on government revenue and fiscal stability. The Parliamentary Committee on Finance and National Planning is responsible for reviewing the bill and incorporating stakeholder input before it is presented for a final vote.
