The teachers’ strike that is currently running could see your taxes raised to as much as twice the current tax rate of 30%. Treasury says that the government might have go that way because its an option to meet the long standing pay rise demands from teachers, doctors and lecturers. Teachers want a 300% pay hike. This will raise their salary budget to KES 470 billion from the current KES 120 billion.
Unrealistic though, are the tax rate increments. In the June 2010, MPs a KES 240, 000 monthly salary increase, taking their monthly pay to KES 1,091,000. Their pay rises 5% each year yet no taxes have been increased since. Civil servants also had their pay hiked but nothing like tax increment came up, yet this was realised.
Finance Minister Njeru Githae told the Business Daily that raising taxes would be the ultimate import of meeting the salary demands because even financing the salaries through borrowings would eventually have to be repaid through higher taxes. He also adds that the government could be forced to suspend development projects such as road construction, schools, bridges and hospitals in order to cater for these demands.
If the new deal is to go through, of which teachers have already rejected, it will see the lowest paid teacher (earning KES 13,750) get KES 500 more thus get KES 14,250 while the highest paid (earning KES 120, 270) will an additional KES 4,000 to make it KES 124,270.
The current income tax table looks like this:-
However, what Mr. Githae could be implying is the income tax table might look like this:-
An MP in UK earns £5,478 a month (KES 750,486) while a Kenyan MP takes home roughly KES 1.2 million.