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{
"id": 1254228,
"url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1254228/?format=api",
"text_counter": 179,
"type": "speech",
"speaker_name": "Prof. Njuguna Ndung’u",
"speaker_title": "The Cabinet Secretary, National Treasury and Economic Planning",
"speaker": null,
"content": "Ksh24,000 per month; 25 per cent is applied to the next Ksh8,333 per month, while 30 per cent is applied to incomes above Ksh32,333 per month. Hon. Speaker, employees who fall under the first category who constitute about 42.5 per cent of the total employed workforce and earn a maximum of Ksh24,000 per month, do not pay any tax to the Government as the tax computed from this income is equal to the relief of Ksh2,400 per month under the Act. The second category of employees constitute 37.2 per cent of the total working population and earn incomes of between Ksh24,000 and Ksh32,333 per month, pay tax at a rate of 25 per cent. The third category of employees that form 20.4 per cent of the total employees earn incomes above Ksh32,333 per month and pay tax at the highest rate of 30 per cent. Hon. Speaker, the tax structure for PAYE means that the tax burden falls on 57.6 per cent of the total employed worker force. The tax structure is, therefore, regressive as an individual employee earning income above Ksh32,333 per month falls within the upper tax band at the rate of 30 per cent, leaving no significant gap between employees who do not pay tax as a result of tax relief and those earning higher incomes. In this respect, we have to review this taxation structure to make the tax bands more progressive, thus sharing the tax burden more uniformly across income groups. As a start on this journey, I propose to the National Assembly to introduce two additional tax bands. A fourth band will be applicable to employees earning incomes between Ksh500,000 and Ksh800,000 per month at the rate of 32.5 per cent, and a fifth band will be applicable to employees earning incomes above Ksh800,000 per month at the rate of 35 per cent. As a result of this change, the employees who will pay tax at 30 per cent will be 19.5 per cent, while the two new tax bands will affect 26,676 employees who constitute about 0.8 per cent of total employed workers in the country. We shall continue to review that PAYE structure to make it as progressive as possible and re-distribute the burden of tax incidence. Measures to enhance tax administration will be through the amendments to the Tax Procedures Act, 2015. Currently, KRA has no visibility on the transactions of trust largely due to a lack of requirement to report by trustees. This makes it difficult to ascertain the tax payable on the incomes paid to beneficiaries of trusts. In this regard, I propose to the National Assembly to amend the Tax Procedures Act to require all trustees administering trusts in Kenya to maintain and avail records required by Kenya Revenue Authority. Hon. Speaker, to enhance tax compliance by use of technology, I propose to the National Assembly to amend the Tax Procedures Act, 2015, to require taxpayers to issue electronically generated tax invoices which can be tracked and traced through an Electronic Tax Invoice Management System (eTIMS). To streamline the tax administration and remove the pressure to abandon taxes and grant waivers of tax, I propose to the National Assembly to amend the Tax Procedures Act, 2015 to remove powers to abandon tax and waivers on penalties and interest that currently exist in the Act. To encourage taxpayers to pay outstanding tax debts, I propose to the National Assembly to introduce a one-year tax amnesty on penalties and interest on the accrued tax debts up to 31st December 2022. To benefit from the amnesty, taxpayers will be expected to clear principal taxes between 1st September 2023 and 30th June 2024. I urge all taxpayers to take advantage of the one-year amnesty to clean their tax ledgers by paying all their tax arrears. Hon. Speaker, to enhance the power of the Commissioner-General to collect taxes from non-compliant taxpayers using agency notices, I propose to the National Assembly to amend the Tax Procedures Act, 2015 to expand the scope of agency notices to cover default in payment of instalment taxes, and in situations where a taxpayer has made a self-assessment and submitted tax returns, but has failed to pay the tax on the due date. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}