Bankers Push for Fresh PAYE Tax Cuts After Ruto’s Proposal to Exempt Low-Income Earners

The Kenya Bankers Association (KBA) has proposed a broader reduction in income tax, urging the government to lower Pay As You Earn (PAYE) rates by five percentage points across all income brackets following President William Ruto’s latest tax relief proposal.

KBA Chief Executive Officer Raimond Molenje made the appeal on Thursday, October 22, arguing that tax adjustments should benefit workers across different salary levels rather than concentrate exclusively on low-income earners.

Ruto’s proposal seeks to exempt employees earning KSh32,333 or less per month from PAYE, offering relief to workers at the lower end of the income scale.

However, Molenje believes a wider reduction would provide more employees with additional disposable income while helping restore public confidence in the government.

Speaking during the release of the 2025 Total Tax Contribution Report, he said the proposed five-percentage-point reduction should be viewed as more than a financial incentive, noting that it could also strengthen the relationship between taxpayers and the state.

The bankers’ proposal comes amid continuing concerns about the cost of living and the amount of money workers retain after statutory deductions.

Under KBA’s illustrative calculations, an employee earning KSh50,000 monthly could take home approximately KSh2,244 more each month if the proposed reduction were applied across the relevant tax bands, with existing reliefs and other conditions unchanged.

This would translate into additional annual earnings of about KSh26,955, providing workers with more money for household expenses, savings and other financial obligations.

KBA has previously estimated that implementing its proposal could return approximately KSh28 billion annually to workers.

The association argues that increased disposable income could stimulate consumer spending, support businesses and strengthen economic activity.

The proposal now presents policymakers with a broader question: whether tax relief should primarily target low-income earners or extend across the workforce.

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