Teachers & Civil Servants To Lose 3% Of Their August Gross Salary. Teachers, government employees, and other workers will contribute 1.5% of their gross salaries to the housing fund.
The tax is retroactive to July 1, 2023. The same amount will be donated by employers on behalf of their workforce.
The controversial tax that goes into force this month comes with a hidden cost for employees, as evidenced by the taxman’s directive to firms to utilize gross pay when determining what to deduct from employee earnings as a housing fee.
The Kenya Revenue Authority’s (KRA) recent requirement that allowances paid to employees, such as hardship, commuter, etc., be included when making monthly computations has surprised human resource departments.
Only the housing fund was included in the earlier version of the Finance Bill; the allowances were not.
Government employees anticipate wage rises in August.
A 7–10% salary increase for civil servants was announced by the Salaries and Remuneration Commission (SRC), and it will take effect on July 1.
For the fiscal year 2023–2024, the increase will cost taxpayers Ksh21.7 billion extra, with Ksh9.5 billion going to teachers.
According to SCR, the average increase over a two-year period will be 7 to 10%, taking into account the current notch increase, which typically increases by 3% annually.
“Where the salary structures are frozen, the notch increase will continue as budgeted up to the maximum salary point,” SRC said.
Executive state officers will receive Ksh126.9 million of the Ksh21.7 billion, while parliamentary state officers would receive Ksh78.9 million.
Judges employed by the state will receive Ksh308.2 million, county government employees Ksh408.9 million, and general government staff Ksh1.8 billion.
County governments will receive Ksh4.1 billion, and the uniformed and organized forces would receive Ksh4.5 billion. The remaining government employees would receive 745.6 million Kenyan Shillings.
The increase in the total cost of the pay bill is largely due to an increase in the number of employees. In order to attain the necessary ratios for efficient service delivery, the government will continue to hire in crucial sectors including security, healthcare, and education.
According to SRC, a growth in worker numbers is not always associated with the provision of vital services.
Teachers & Civil Servants To Lose 3% Of Their August Gross Salary