Why Most Kenyans Won't Benefit Form Covid-19 PAYE Relief

Why Most Kenyans Won’t Benefit Form Covid-19 PAYE Relief

By Soko Directory Team / April 2, 2020 | 9:19 pm

It is unfortunate that the pandemic has found us as unprepared nation, economy, culture, and people. It has found a government that has no strategies and reserve funds for emergencies and epidemics or pandemics.

A government that has neglected the health sector because they can afford to fly for medical attention. It has found a straining economy of jobless and low earning people who live from hand to mouth. An economy where agribusiness doesn’t exist. An economy that can’t feed its people.

It has found people with outdated culture and arrogance. People who hate even their own life. But all the same, the government is having to find ways to help the common man survive during this storm.

It’s with no alternative than it had to reduce the tax rates so as to increase the cash flow in the economy. It as a considerable decision to some extent but which will benefit only a few. These are the reasons why I think PAYE relief won’t benefit most Kenyan.

A huge number of Kenyans are unemployed. Recent research has shown that we have more than 2 million graduates who are jobless and they have no income to account for. So how will this relief benefit a person without any income?
Informal sector- the pay as you earn tax relief is only for the employed individuals by reducing their monthly taxes and increasing their net income. This means the informal sector and Jua Kali industries will have to survive the same little earning even during this storm.
Loss of jobs due to lockdown of companies-due to the government directives, many companies have been forced to close their operations until further notice thus laying off employees. How will the relief benefit someone who has lost their source of income?
Pay cut: As safety measures, some company has opted for its employees to work in shifts. This is to enhance social distancing in the office and this will affect the monthly income due to absenteeism thus they will have little or no benefit from the tax relief.
Unpaid leave: Due to self-safety measures, many have considered taking unpaid leave from their jobs. This means they will have no pay during this season and therefore they will not have the relief benefit.
Employers will take advantage of the relief by reducing the gross pay of employee thus reducing the company operating cost especial due to the fact that their business are slow. That means the individuals will not have any increment in their net income.

Before you calculate your relief benefits, remember it’s still a proposal until gazette notice is issued. Before you harass your company accountant on the salary increment, try to find if your Member of Parliament has resumed back to the session to approve the proposed bill. Then wait until the president signs and it will then published on Kenya Gazzette.

***This article has been written by Faith Njenga an Accountant and Tax Consultant***

About Soko Directory Team

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