President William Ruto has defended the Affordable Housing Levy. He explained how proposed Pay As You Earn tax cuts could leave a teacher earning Ksh50000 with an additional Ksh1250 in monthly take-home pay despite housing levy deductions.
Speaking at the official opening of the Kenya Comprehensive School Heads Association meeting in Mombasa on Thursday November 12 Ruto said the government plans to raise the monthly income exempted from PAYE from Ksh24000 to Ksh32000.
He argued that the proposed relief would more than offset the 1.5 per cent housing levy deducted from workers’ salaries. This would allow employees to keep more of their earnings.
“My competitors are sponsoring a debate saying they want to protect the payslip. We are proposing that we want to remove PAYE on the first Ksh32000 on what you earn” he said.
According to Ruto the additional Ksh8000 in tax-free income would translate into Ksh2000 in monthly savings for workers in the 25 per cent tax bracket.
Using a teacher earning Ksh50000 as an example he said the employee would contribute Ksh750 to the housing levy but save Ksh2000 through the PAYE reduction. He said the difference is Ksh1250.
The proposed adjustments form part of a wider tax relief plan. It also seeks to raise the monthly tax-free income threshold to Ksh32333 while abolishing the existing Ksh2400 personal relief.
Employees would continue contributing 1.5 per cent of their gross salaries to the Affordable Housing Programme. This means the PAYE reduction would offer relief without scrapping the levy.
Ruto defended the housing programme saying it had created jobs and supported the construction of homes and markets and student accommodation. He said about 1.1 million people work under the initiative.
https://x.com/Kenyans/status/2120837571018437021?a=aC9gM37294-aACFEZAo&s=19
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