Treasury Cabinet Secretary John Mbadi has announced that the government may not fulfil the promise to do away with pay-as-you-earn (PAYE) tax for Kenyans earning up to Ksh30,000.
Speaking on Monday, May 11, CS Mbadi explained that the move would create a KSh30 billion deficit in the budget if implemented.
He noted that the Treasury is seeking to restructure personal income tax and rental income tax to raise more revenue, which would then pave the way for lower PAYE.
“If the reforms bear fruit, we will collect much more from personal income tax, which will compensate for this. The other area is the rental income tax.
“Those are the things we are working on, but that will not stop us from implementing or actualising the proposal that we announced publicly,” Mbadi said.
At the same time, CS Mbadi said the Kenya Revenue Authority (KRA) was seeking access to financial data to clamp down on billionaires in the country who are underpaying or deliberately evading taxes.
“We would have even reduced PAYE so that people pay less, but because we have people who earn money but do not want to pay taxes, taxpayers bear a lot of the burden,” the Treasury CS Stated.
Further, CS Mbadi clarified that mobile money will not be used to determine income, but to gauge transactions on wallets that may pass as income for purposes of levying taxes.
“M-Pesa is not an income; it is a transfer of funds. Nobody will come for that,” the Treasury CS reassured.
