Low income earners will be exempted from paying tax on bonuses, overtime and retirement benefits. President Uhuru Kenyatta’s directive to National Treasury is part of the drive to improve the living standards of Kenyans.

He instructed the National Treasury to include in the 2016 Finance Bill sustainable measures for the implementation of the plan. President Kenyatta’s directive follows a plea by the Central Organisation of Trade Unions (Cotu) to the government to stop taxing retirement savings of employees.

The President, however, said the tax review should be done in a way that does not hurt employers. “This will be done in a manner that does not place an additional burden on employers, or increase the cost of employment,” the President said.

Mr Kenyatta, who spoke at the 2016 Employers Summit in Naivasha, also urged Cotu and the Federation of Kenyan Employers (FKE) to actualise the creation of a centre that promotes productivity.

“I urge engagement between my administration, the FKE and Cotu, to consider and actualise the creation of a centre dedicated to promoting productivity — much along the lines of the one implemented by the Japanese Government,” the President said.

The Centre, he added will enable Kenya “to tackle the question of improving living standards within the broader context of growing productivity and the economy”.

At the same, the President called on the private sector to work with govern in prioritising efforts to deal with youth unemployment.  “Africa is 70 per cent youth, but over 50 per cent of those young people are illiterate, or unskilled, or unemployed or under-employed.

‘‘None of you needs me to tell you that this status quo is dangerous,” the President said as he urged the business community to implement affirmative action to support the youth just like the government has adopted procurement rules that are youth friendly.

Remove impediments to business

The President said youth unemployment is at a c****s level in Africa and described the problem as an existential threat for the continent. At the Summit, attended by representatives from more than 34 African countries, the government was commended for making it easy to do business in Kenya.

Speakers including Safaricom CEO Bob Collymore and FKE chairman Linus Gitahi said the private sector is pleased with the government’s zeal to support business. During a question and answer session moderated by Mr Collymore, President Kenyatta said the government will continue removing all impediments to doing business in Kenya.


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