Home News Govt proposes to tax employed Kenyans "unemployment tax" to cushion the jobless

Govt proposes to tax employed Kenyans “unemployment tax” to cushion the jobless

Employed Kenyans will now have to cough up 2% of their salaries for the next two years as taxes as part of the government’s efforts to cushion the jobless from the harsh effects of Covid-19.

This proposal is an economic recovery strategy to deal with the harsh economic effects of Covid-19. This new tax will add the taxation burden to the employed Kenyans who are already having statutory deductions such as NSSF and NHIF.

Employers will partly contribute to the tax sharing the burden half-half with the employee, producing 1%. The National Treasury also explained that the funds would go into an Unemployment Insurance Fund (UIF).

“The government will establish a UIF to cushion workers in financial distress by providing them with short-term relief when they become unemployed or are on unpaid leave or unable to work because of illness,” the treasury said.

Govt proposes to tax employed Kenyans "unemployment tax" to cushion the jobless

“The amount of contribution to the fund with being two per cent which includes one per cent paid by employees from remuneration paid and one per cent paid by the employers.”

However, the treasury did not delve into details on how much money it will collect from the taxation during the set period.

High unemployment numbers.

According to the latest figures by the Kenya National Bureu of Statistics (KNBS), 15.9 million Kenyans will carry this taxation burden. These numbers are a reduction in the country’s working-class after Kenya’s unemployment numbers doubled between April and June 2020.

The National Treasury has also not yet given details on how people can qualify for the program as the unemployed.

In more developed countries like the United States, the government has unemployment insurance. The state will financially assist people who lose their jobs as long as they meet the set criteria.

However, one can’t qualify if they voluntarily quit their job or if they are self-employed. The program runs for six months or 26 weeks.

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