Unions threaten to strike if MPs pass Finance Bill

Tuesday, May 30th, 2023 05:20 | By
Unions threaten to strike if MPs pass Finance Bill
Unions threaten to strike if MPs pass Finance Bill

Pressure continued to pile on President William Ruto and the Kenya Kwanza government over the controversial Finance Bill with numerous public sector workers’ unions protesting over plans to raise taxes when the Budget is read next month.

The unions have also warned of industrial action should Parliament approve the tax measures that workers fear could reduce their disposable incomes. Union leaders yesterday argued that if passed, the Bill, which seeks to increase deductions on public servants’ pay, will burden the workers.

Besides increasing deductions for health insurance and retirement savings, the Finance Bill has also proposed to impose a three per cent housing levy — to be capped at a maximum of Sh2,5000 monthly – to finance a housing scheme that the government has said is meant to create jobs and spur economic activity. The government has also proposed to review Value Added Tax on petrol from eight to 16 per cent, which applies for all goods and services.

Yesterday, however, trade unions threatened to mobilise their members to disrupt operations in government institutions should the Bill be passed in its current form.

The CS for the National Treasury, Njuguna Ndung’u, is scheduled to table the Budget — also known as the Finance Bill — in Parliament in two weeks.

The public had until yesterday to give their views on the tax measures proposed. And whereas there has been robust opposition to the tax measures, especially the housing levy, some groups, such as artisans and university students have supported the proposed measures, arguing that this will create jobs in the informal sector.

Those opposed to the proposals, led by officials of unions representing teachers and nurses among others, yesterday held a peaceful demonstration in Nairobi to reject some of the proposed taxes and levies contained in the Bill.

They began their protests from the University of Nairobi’s graduation square, making their way through University Way to Koinange Street before joining Parliament Road to access the National Assembly’s gate where they presented a joint memorandum to Parliament as part of the public participation anticipated in law.

Notable unions that took part in the protests included the Kenya National Union of Teachers (Knut), Kenya Universities Staff Union (Kusu), Universities Academic Staff Union (Uasu), Kenya Medical Practitioners and Dentist Union (KMPDU), Kenya Union Of Domestic Hotels Educational Institutions Hospitals and Allied Workers, Kenya National Union of Nurses (KNUN) and Kenya Union of Clinical Officers (KUCO).

Class war

They accused the government of being insensitive to the financial difficulties many workers are enduring due to harsh economic times, saying the government had deviated from its campaign promise of lowering the cost of living.

“We consider these proposals as not only inhuman but degrading to the Kenyan worker. The plethora of taxes and levies in the Bill will sink the worker, especially now that the payslip of the Kenyan public worker has not been improved for the last six years or more,” the unions said in their memorandum.

The workers’ unions said their representatives were not consulted during the drafting of the Bill and that they would only accept a Bill that proposes measures aimed at lessening the financial burden on the shoulders of Kenyan workers.

“We, therefore, reject the introduction of the Housing Fund Levy until proper consultation and negotiation with workers’ representatives has been done,” they said

UASU Secretary-General Constantine Wasonga warned that imposing the housing levy would cause a class war between the employed and the jobless.

“We are not going to accept a three per cent pay cut as a housing levy. The day Parliament will pass this draconian Bill, the following day will proceed on a nationwide strike. On this one, we (officials) will not betray you by going to State House,” he told members during yesterday’s demonstrations.

Instead of the government imposing the housing tax on workers, the unions urged it to collapse all current mortgage schemes for State officers and other benefiting entities it sponsors and direct the money to the Housing Levy Fund.

The unions noted that any additional taxes would spell doom to the many workers who are likely to be left with low disposable incomes. They termed the move to impose the levy as illogical, saying not every taxpayer will qualify to own a house even after the government makes it mandatory for workers to pay the tax.

“It amounts to coerced saving and illegal borrowing and it will be disastrous to households who are left with little income for their basic survival,” the unions lamented.

Further, the officials said opposed plans to raise Pay As You Earn (PAYE) from the current 30 per cent to 35 per cent for those earning Sh500,000 and above. They said many workers had not received any salary increment in the last six years.

“We are, therefore, rejecting the proposal to increase the upper bracket of PAYE from the current 30 to 35 per cent and in the alternative propose the reduction from 30 to 25 per cent. In our view, this will put more money in mwananchi’s pocket and hence help spur consumption,” they said.

Additionally, the unions opposed the 2.75 per cent increase to National Hospital Insurance Fund (NHIF) deduction from gross income saying that it will only benefit corrupt officials at the insurer.

“The new NHIF rebate will make the Fund a fat cash cow to the corrupt cartels as demonstrated by previous reports that were done by the Ethics and Anti–Corruption Commission (EACC),” the memorandum said.

The unions urged the government to retain the current contribution of Sh1,700 but introduce a maximum contribution of Sh1,700 by employers to match employee’s contributions, which would effectively slap employers with a new obligation to pay for the health insurance of their staff.

Ruto push

National Assembly Minority Leader Opiyo Wandayi and Suna East MP Junet Mohamed, while addressing the protesters, told them that they will ensure that Parliament does not pass the Bill.

“Let them bring that Bill to Parliament. We will represent you and forward your demands. We will make sure that it does not see the light of day,” Wandayi said.

The Minority said does not, at present, have sufficient numbers to stop the passing of the Bill and may have to rely on dissenters from the Majority side to push through amendments.

Adding his voice to the Minority side opposing the tax, Junet Mohamed: “If the people have rejected the taxes, the MPs will exercise the will of the people.”

Last week, President Ruto hosted a Parliamentary Group meeting with Kenya Kwanza legislators at State House, Nairobi, where he called on the lawmakers to pass the controversial Bill when it is tabled in Parliament on June 13.

The President has consistently defended the affordable housing programme to be funded by the housing levy saying it will create job opportunities among the youth as well as expand business opportunities for small and micro enterprises that will supply construction material to the project.

Azimio la Umoja Coalition leader Raila Odinga has, however, maintained that the levy is unsustainable and should be shelved because it will overburden taxpayers who are already grappling with a high cost of living.

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