Employers Oppose Gov’t Plan To Continue Overtaxing Kenyans, Warn Of Job Cuts
The Federation of Kenya Employers (FKE) has warned that employers will soon be forced to stop employing and to cut down on employees on permanent and long-term contracts as they struggle to tame the wage bill.
According to the employers, the move by the government to increase the tax base has placed a huge burden on formal employers and employees and could result in business closures, job losses, and a slowdown in economic growth.
They claim the country has already lost over USD 354 million worth of foreign direct investment in the last three months due to a sharp drop in economic growth occasioned by such unfriendly policies and want the government to reconsider its strategies.
FKE Executive Director Jacqueline Mugo, addressing the press on Friday, stated: “All this raft of changes, whether its’ looking at health, training, PAYE, and housing levy just means that there is more burden on employers, and they have to find innovative ways of getting the job done without being stuck with a fixed wage bill.”
“The more you tax the formal sector, the more you make it difficult for those who enterprises to create jobs, and we’re seeing that.”
FKE President Habil Olaka, on his part, said: “The underpinning philosophy in tax management should not be taxing people and corporations into poverty. It should instead support many businesses and persons to increase their productivity, and thereby enter into the tax bracket.”
Employers have also taken issue with the proposed legislative changes included in the Universal Health Coverage Bills 2023 claiming it will raise business costs and strain the already squeezed incomes at a time when Kenyans are struggling with the high cost of living.
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According to FKE, the approach by the government to place the burden of funding UHC on formal workers and employers is misguided, stating that the formal sector accounts for a small percentage of overall wage employment in the country as compared to the informal sector.
“FKE holds the view that this model will face challenges given that the formal wage employment is only 15% of the total wage employment,” stated Mr. Olaka.
Ms. Mugo added: “And even the jobs that are being created are from the informal sector which is 3/4 of the employment sector so we have been seeing a reduction in the number of formal sector jobs even before the current regime came into office the more you tax the formal sector, the more you make it difficult for those enterprises to create jobs.”
The employers are hence warning of expensive consequences in the business environment courtesy of the unfriendly policies.
FKE wants the Ministry of Health to consider the views of employers in proposed UHC reforms before the Bills are tabled in Parliament.
This is even as they challenge the government to reconsider its strategy of funding its bottom-up development agenda
In the meantime, the employers are also challenging the proposals in the Employment Amendment Bill 2022 stating that they infringe on the rights of employers and negate the emerging realities of the labour market.
Employers Oppose Gov’t Plan To Continue Overtaxing Kenyans, Warn Of Job Cuts
