Pay As You Earn (PAYE) taxes fell to Sh363.34 billion in the review year from Sh399.20 billion the year before and the lowest since the year ended June 2018.
Treasury Secretary Ukur Yatani says in the full-year budgetary and revenue performance report that payroll tax receipts surpassed the Sh361.03 billion goal set for the taxman.
The Treasury says taxes on workers’ earnings for the financial year ended June 2021 exceeded the target despite falling Sh35.86 billion, implying Covid-induced job cuts, hiring freezes and a pause on pay raises were softer than expected.
Pay As You Earn (PAYE) taxes fell to Sh363.34 billion in the review year from Sh399.20 billion the year before and the lowest since the year ended June 2018 when the economy was smarting effects of the prolonged 2017 presidential poll.
Treasury Secretary Ukur Yatani says in the full-year budgetary and revenue performance report that payroll tax receipts surpassed the Sh361.03 billion goal set for the taxman by nearly Sh2.32 billion.
The data shows that PAYE recovered in the half of the year through June 2021, registering a year-on-year growth of Sh16.79 billion, or 8.66 percent, to Sh210.73 billion.
The collections, remitted to the Kenya Revenue Authority (KRA) by the 9th of the following month, had fallen 25.65 percent in the first half through December 2020 at a time tax reliefs were still in place.
Mr Yatani reinstated the maximum income tax rate of 30 percent for workers on January 1 after getting approval from lawmakers, ending an eight-month relief where the top rate tax had been reduced to 25 percent.
The Treasury spared workers earning monthly pay of Sh24,000 whose pay remains tax-free, but compensated this by expanding the maximum payroll tax band to apply from a salary of Sh32,333 compared with Sh47,057 in the pre-Covid period.
The Covid-19 containment measures such as a night curfew, enforced on March 25 last year, saw companies scale down operating hours, which in turn exacerbated a drop in sales.
That prompted firms to cut workforce, slash salaries and adopt unpaid leave policies in a bid to contain costs amid depressed earnings.
While private firms brought to a job-shedding streak, which had started in February, last October, but
stepped up pay cuts and lower salary offers for new recruits, according to a monthly survey that polls corporate managers in key sectors such as manufacturing, services, and agriculture.
The 8.98 percent drop in full-year PAYE taxes reflects a tough labour market that has seen firms tighten lids on operating costs to stay afloat in an economy struggling to recover from Covid-19 knocks.
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Note: The results are not exact but very close to the actual.
