New Tax on Salaried Kenyans to Cater for Unemployed Kenyans
Salaried Kenyans are facing the prospect of new monthly deductions as a result of the Unemployment Insurance Bill 2022, which was presented to the parliamentary budget office on Thursday, 7th August 2023, for consideration.
This bill, put forth by Ikolomani Member of Parliament Bernard Shinali, proposes monthly contributions from both employers and employees to establish an Unemployment Insurance Fund, drawing inspiration from South Africa, where both employers and employees contribute 1 percent each.
The primary objective of this proposal is to provide unemployment benefits to employees who find themselves jobless or their beneficiaries. It aims to establish the Unemployment Insurance Fund through contributions from both employers and employees, ultimately assisting individuals facing economic hardships due to unemployment.
In addition to salary deductions, the fund will also receive contributions through parliamentary appropriations from the national government, county government funds, as well as donations and grants from development partners.
The Bill outlines that the funds will be managed by the Unemployment Insurance Authority, which will be established through an act of parliament. This Authority will operate under specific rules and regulations, comprising a board of nine members and a chairperson.
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The functions of this Authority encompass administering the Fund, providing advice to the Cabinet Secretary on unemployment insurance policies and legislation, advising both levels of government on matters related to unemployment and unemployment insurance policies, and facilitating the implementation of such policies.
If the Shinali-sponsored bill is passed in parliament, the Treasury Cabinet Secretary will have the authority to exempt certain categories of employees from mandatory salary deductions, based on advice from the Salaries and Remuneration Commission (SRC), which determines salaries for state officers and public servants.
Eligibility for benefits from the Unemployment Insurance Fund will be extended to Kenyan citizens aged between 15 and 64 years who have been actively seeking employment for four consecutive weeks without success.
Additionally, these individuals should not be incapacitated in a way that prevents them from working if a job opportunity arises.
New Tax on Salaried Kenyans to Cater for Unemployed Kenyans
