{"id":1256,"date":"2025-05-05T08:45:16","date_gmt":"2025-05-05T08:45:16","guid":{"rendered":"https:\/\/www.insuracarelife.com\/blog\/people-who-are-salaried-are-crying-taxes-on-workers-add-to-debt-misery\/"},"modified":"2025-05-05T08:45:16","modified_gmt":"2025-05-05T08:45:16","slug":"people-who-are-salaried-are-crying-taxes-on-workers-add-to-debt-misery","status":"publish","type":"post","link":"https:\/\/www.insuracarelife.com\/blog\/people-who-are-salaried-are-crying-taxes-on-workers-add-to-debt-misery\/","title":{"rendered":"\u2018People Who Are Salaried Are Crying\u2019: Taxes on Workers Add to Debt Misery"},"content":{"rendered":"<div data-testid=\"companionColumn-0\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The pay stubs tell the story. Hefty deductions to help cover the cost of Kenya\u2019s new funds for affordable housing and health insurance. More money subtracted for jacked-up contributions to the National Social Security Fund and an increase in the tax rate.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">In a matter of months, Kenyans with a 45,000-shilling-a-month salary \u2014 roughly $350 \u2014 saw their take-home pay shrink 9 percent, to $262.<\/p>\n<p class=\"css-798hid etfikam0\"><strong class=\"css-8qgvsz ebyp5n10\">Pay stubs for an employee at Shining Hope for Communities, a nonprofit in Kenya:<\/strong><\/p>\n<p class=\"css-9w1fbe e6idgb70\">JUNE 2024<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-2\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cPeople who are salaried are crying,\u201d said Kennedy Odede, the founder of a self-help association in Nairobi\u2019s Kibera slum.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-3\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The increased payroll taxes are one element of President William Ruto\u2019s desperate bid to raise revenue to keep the government running and pay off Kenya\u2019s staggering foreign debt.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">New excise taxes were put on sugar, alcohol and plastics. A tax on business profits doubled to 3 percent. Government fees for money transfers and for phone and internet data services went up 15 to 20 percent. A tax on every import, including essentials like wheat and cooking oil, to be used for railroad development was increased to 2 percent from 1.5 percent. Some exemptions for retirees were scrapped. The list goes on.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Tax increases are never popular. But the impact on countries like Kenya, with low incomes and crippling debt, is particularly acute. Years of harum-scarum borrowing and spending combined with economic wallops from the Covid-19 pandemic, soaring interest rates and inflation helped drive up Kenya\u2019s debt to $80 billion.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Kenya has to use nearly 60 percent of its revenue for paying off its loans. It is a common problem across Africa, where many countries spend more on interest payments than on health or education.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-4\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">At the same time, countries need billions of dollars in new financing for basic medical care, schools, clean water, sewage systems, paved roads and climate-related disaster relief.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Getting the country\u2019s finances in order is a prerequisite for long-term growth. But there are limited options to raise such revenue in Kenya, where <a class=\"css-yywogo\" href=\"https:\/\/www.knbs.or.ke\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">40 percent<\/a> of its 52 million people live in poverty and youth unemployment is estimated to top 25 percent. Small businesses and subsistence agriculture make up much of the economy.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-5\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">According to one estimate, <a class=\"css-yywogo\" href=\"https:\/\/www.researchgate.net\/publication\/356433989_Estimating_the_size_of_the_informal_sector_in_Kenya\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">83 percent<\/a> of the country\u2019s labor force works in jobs that are out of tax collectors\u2019 sight, including as hairdressers, maids, street sellers and drivers.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">That means the sliver of the population that works in enterprises that record salaries bears most of the tax burden.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">\u201cOur buying power has really decreased because of the taxes,\u201d said Elizabeth Okumu, who works at Shining Hope for Communities, or <a class=\"css-yywogo\" href=\"https:\/\/www.shofco.org\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">SHOFCO<\/a>, the nonprofit organization Mr. Odede started two decades ago.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-6\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">The country\u2019s economic crisis has pushed the value of the shilling lower in relation to the dollar, meaning that the cost of imports has soared. Six months ago, a thousand shillings ($7.73) were enough for cooking oil, flour, rice and sugar, said Ms. Okumu, chairwoman of SHOFCO\u2019s urban network in Nairobi. Now, she said, she can buy only sugar and flour with that same amount.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Last year, proposed tax increases set off deadly riots in Nairobi, the capital. More than 50 people were killed, and part of Parliament was set on fire. The government temporarily backed down, only to reimpose many of the additional taxes and fees a few weeks later.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The government has been <a class=\"css-yywogo\" href=\"https:\/\/www.reuters.com\/world\/africa\/kenya-has-applied-new-imf-lending-programme-finance-minister-says-2025-03-24\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">talking<\/a> to the International Monetary Fund about a new loan package. The fund is likely to ask for additional guarantees that the Ruto administration will cut spending and raise more revenue. But you can\u2019t squeeze much water from a wrung-out towel.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Behind the widespread discontent with specific policies is a deep cynicism about the government\u2019s ability to either pay back the debt or provide essential services.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-7\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Regular reports from the country\u2019s auditor general<strong class=\"css-8qgvsz ebyp5n10\">, <\/strong><a class=\"css-yywogo\" href=\"https:\/\/www.oagkenya.go.ke\/nancy-gathungu\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Nancy Gathungu<\/a>, detail gross examples of corruption or mismanagement. At the end of last year, for example, she said, the government could not account for more than <a class=\"css-yywogo\" href=\"https:\/\/www.kenyans.co.ke\/news\/106797-treasury-under-fire-over-ksh-160b-unaccounted-debt-repayments\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">$1.24 billion<\/a> that had been earmarked for debt payments. In March, Ms. Gathungu reported that $64 million worth of government-funded <a class=\"css-yywogo\" href=\"https:\/\/eastleighvoice.co.ke\/covid%20vaccine-covid%20vaccines%20africa\/127485\/kenya-faces-sh8-3-billion-loss-over-undelivered-covid-19-vaccines\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">Covid-19 vaccines<\/a> had never been delivered. Critics have also fumed about extravagant spending by government officials.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-8\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cRuto says we need to pay our debts, but there are no public services to show for it,\u201d said Tatiana Gicheru, a student at Strathmore University in Nairobi. \u201cI can\u2019t walk into a government hospital and get any services.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-9\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">Ms. Gicheru, 21, sat outside Java House, a coffee chain in Nairobi, and sipped a latte with her friend Jewel Ndung\u2019u. Ms. Ndung\u2019u, 25, graduated from Strathmore two years ago and has been looking for full-time work as an analyst or a developer. From September to January, she said, she applied for 73 jobs. She got half a dozen callbacks and no job offers.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Where is the affordable housing? Where are health services and public transportation? Ms. Ndung\u2019u asked. Ms. Gicheru added, \u201cSuddenly the system is crumbling.\u201d<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Ms. Ndung\u2019u said she would rather see Kenyans directly pay off the debt to <a class=\"css-yywogo\" href=\"https:\/\/www.chathamhouse.org\/2022\/12\/response-debt-distress-africa-and-role-china\/02-case-studies-chinese-lending-africa\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">China,<\/a> the country\u2019s biggest bilateral creditor, by using M-Changa, a digital fund-raising platform, instead of giving the money to the government through taxes and trusting it to do it.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">As taxes rise, Kenyans have grown angrier about the lack of public services. In November, a crowd of people frustrated about dilapidated roads in Syokimau, a few miles south of Nairobi\u2019s main airport, jeered as they forced their council representative to <a class=\"css-yywogo\" href=\"https:\/\/www.tuko.co.ke\/kenya\/counties\/570687-drama-angry-syokimau-residents-force-mca-daniel-mutinda-walk-muddy-road-tembea-tu\/\" title=\"\" rel=\"noopener noreferrer\" target=\"_blank\">walk through flooded<\/a>, muddy streets.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-10\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">In the southwestern part of Nairobi is Kibera, considered the largest urban slum in Africa. Its dirt streets teem with shoppers, pedestrian commuters, peddlers, hustlers, students in neat uniforms and residents filling bright yellow jerrycans with clean water from coin-operated taps. They navigate around piles of garbage and occasional raw sewage as well as motorbikes and bicycles hauling oversize loads better suited to a sport utility vehicle. There are no government-funded sanitation services in Kibera.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">The jampacked skyline features ramshackle homes of plasterboard, rusted roofs, and a forest of haphazard poles and wires on which illegal electricity hookups hang like Christmas ornaments.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Benedict Musyoka, a youth community organizer in Kibera, said a young man had told him: \u201cI won\u2019t marry.\u201d Earning enough to support himself is hard enough, let alone with a wife and child. And the man had a degree. \u201cYou are taxing hard, and we have no jobs,\u201d Mr. Musyoka said.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-11\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">With Kenya\u2019s level of debt, there are no easy options, said Thys Louw, a portfolio manager at Ninety One, a global investment firm in London. Expanding the revenue base \u2014 bringing more businesses and people who are not currently paying taxes into the system \u2014 is crucial, he said. And there are too many exemptions.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-12\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">In Kenya, taxes amounted to 16.6 percent of the country\u2019s total output in 2022, according to the Organization for Economic Cooperation and Development. The share is not unusual in Africa, but half the amount found in richer industrialized nations.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">June will be one year since the riots, and talk of commemorative gatherings and further protests is bubbling. That is also when the government will be finishing a new budget, which could possibly include further tax rises.<\/p>\n<p class=\"css-at9mc1 evys1bk0\">Many people like Ms. Okumu at SHOFCO fear there will be more riots. People work so hard, she said, hoping \u201cthat tomorrow they\u2019ll see the light.\u201d<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n<div data-testid=\"companionColumn-13\">\n<div class=\"css-53u6y8\">\n<p class=\"css-at9mc1 evys1bk0\">\u201cBut when tomorrow comes, it\u2019s still darkness.\u201d<\/p>\n<p class=\"css-798hid etfikam0\">Abdi Latif Dahir<!-- --> contributed reporting.<\/p>\n<\/div>\n<aside class=\"css-ew4tgv\" aria-label=\"companion column\"\/><\/div>\n","protected":false},"excerpt":{"rendered":"<p>The pay stubs tell the story. Hefty deductions to help cover the cost of Kenya\u2019s new funds for affordable housing and health insurance. More money subtracted for jacked-up contributions to the National Social Security Fund and an increase in the tax rate. In a matter of months, Kenyans with a 45,000-shilling-a-month salary \u2014 roughly $350 [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1257,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[769,940,687,942,214,939,941,380],"class_list":["post-1256","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-add","tag-crying","tag-debt","tag-misery","tag-people","tag-salaried","tag-taxes","tag-workers"],"_links":{"self":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1256","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/comments?post=1256"}],"version-history":[{"count":0,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/posts\/1256\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media\/1257"}],"wp:attachment":[{"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/media?parent=1256"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/categories?post=1256"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.insuracarelife.com\/blog\/wp-json\/wp\/v2\/tags?post=1256"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}