National Treasury has admitted that high taxes on salaries are among the three key reasons Kenyans have no money in their pockets despite an improved economy.
Speaking at the launch of the FinAcess Survey 2024 by the Central Bank of Kenya (CBK), Kenya Bankers Association (KBA) and FSD, Treasury CS John Mbadi promised to ask the cabinet to consider easing Pay-As-You-Earn as the budget deficit shrinks.
“We have listed to the public. While inflation has eased to a 17-year low, shilling strengthened against major currencies and indicators showing that the economy is growing above Sub-Saharan Africa’s average, people say they have no money. We have interrogated the cause,’’ Mbadi said.
“Taxes take eight per cent of salaries. That is huge. Other factors are high bank rates that are hindering credit uptake and non-payment of pending bills. We continue to urge financial institutions to lower lending rates to support businesses.”
Mbadi attributed the high taxes to a huge budget deficit that was initially at above Sh900 billion which forced the government to enhance domestic revenue mobilisation after ruling out more debt.