President William Ruto has defended the Affordable Housing Levy, explaining how proposed Pay As You Earn (PAYE) tax cuts could leave teachers earning an estimated Ksh50,000 with an additional Ksh1,250 in monthly take-home pay despite housing levy deductions.
Speaking during the official opening of the Kenya Comprehensive School Heads Association (KECSHA) meeting in Mombasa on Thursday, November 12, Ruto said the government plans to increase the monthly income exempted from PAYE tax from Ksh24,000 to Ksh32,000.
He argued that the proposed tax relief would more than offset the 1.5 per cent Housing Levy deducted from workers' salaries, allowing employees to retain more of their earnings.
Ruto explained that under the proposed changes, employees would not pay PAYE on the first Ksh32,000 of their monthly taxable income, compared to the current Ksh24,000 threshold.
"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 Ksh32,000 on what you earn," he revealed.
According to Ruto, the additional Ksh8,000 in tax-free income would translate into Ksh2,000 in monthly tax savings for workers whose income falls within the 25 per cent tax bracket.
Using a teacher earning Ksh50,000 as an example, Ruto calculated that the employee would contribute Ksh750 towards the Housing Levy but save Ksh2,000 through the proposed PAYE…
