Teachers and other Civil Servants in Kenya will have their payslips raided in a new tax regime by the Kenyan Government. Proceeds from the new tax will go towards cushioning unemployed Kenyans as the economy grapples with the effects of the Covid-19 pandemic.
In a proposal by the National Treasury post COVID-19 economic recovery strategy, all employed Kenyans will pay one percent of their salaries with their employers topping with a similar amount. Funds collected will go into the yet to be set up unemployment insurance fund (UIF).
“The government will establish a UIF to cushion workers in financial distress by providing them with short-term relief when they become unemployed, or are on unpaid leave or unable to work because of illness….The amount of contribution to the fund with be two per cent which include one per cent paid by employees from remuneration paid and one per cent paid by the employers.” says a report from the National Treasury.
This will add to the long list of statutory deductions on teachers’ payslips. Already teachers pay a mandatory portion of their monthly salaries towards the National Hospital Insurance Fund (NHIF) and the Pay As You Earn (PAYE) tax.
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The government through the Ministry of Planning and National Development is set to raise Sh300 Million by 2022 so as to cushion the unemployed Kenyans and those who lost jobs due to the Covid-19 pandemic.
The government has been cushioning the vulnerable in the Society through the ‘Inua Jamii ‘social protection program; thet provides cash to orphans and vulnerable children, older persons and people with severe disabilities.
Next year teachers and civil servants are also expected to contribute towards the new contributory pension scheme.
The government will be rolling out the new pension scheme for all teachers and civil servants on January 1, 2021. All employees in the formal sector are expected to contribute 7.5% of their monthly basic salaries towards the statutory pension scheme.