The Treasury is focused on high earnings, M-Pesa transactions, and fuel consumers in an effort to raise an additional Sh364 billion in taxes for the new budget.

This manner of tax collection would erode worker wages, which are already being eroded by inflation.

For employees earning more than Sh600,000, the highest income tax rate would rise to 35% from 30%, with a minimum monthly surcharge of Sh5,000.

The administration of President William Ruto has suggested raising the excise duty on mobile money transfer fees from 12% to 15%, paving the way for a reevaluation of M-Pesa transfer rates.

The Treasury also withdrew legislation measures that would have decreased the value-added tax (VAT) on all petroleum goods to 8% in the recently issued Finance Bill. Based on current rates, petrol and diesel prices may rise by Sh13.20 and Sh10.50 per litre, respectively.

Workers’ pay stubs will get even smaller as the Treasury plans to remove three percent of all employees’ basic earnings for a National Housing Development Fund to promote affordable home ownership.

Furthermore, additional monthly contributions to the National Hospital Insurance Fund (NHIF) and the National Social Security Fund (NSSF) reduce employees’ take-home pay even further.

Families are feeling the pinch in Kenya, where since June of last year, inflation has exceeded the government’s anticipated 7.5 percent target due to skyrocketing food and fuel prices.

As a result of reduced growth in food prices, inflation decreased from 9.2 percent in March to 7.9 percent in April.

Despite the economic recovery following the relaxation of anti-Covid-19 policies, employers are warning that it would take years for salary increases to return to pre-pandemic levels as they worry about business uncertainty.