NAIROBI, Kenya, May 27– The Central Organization of Trade Unions Kenya (COTU-K) now wants Parliament to revise PAYE bands for workers earning up to Sh60,000 monthly, arguing that the Finance Bill 2026 has failed to address mounting pressure on salaried Kenyans facing rising living costs and multiple statutory deductions.
In its submissions to Parliament on the Finance Bill 2026, the trade union federation said workers’ purchasing power has significantly weakened in recent years due to inflation, higher fuel and food prices, transport costs, and deductions linked to the Affordable Housing Levy, Social Health Authority contributions, and enhanced NSSF rates.
The union is proposing an upward review of the tax-free threshold, lower payroll taxes for low- and middle-income earners, and automatic annual inflation adjustments to PAYE bands to protect workers from what it termed as bracket creep.
“According to COTU (K) research, economic and education department, the proposed PAYE relief targeting workers earning up to Kshs. 60,000 would release over Kshs. 31 billion back into the economy as usable household income,” the federation said.
“This would significantly stimulate consumption, improve household welfare, support local businesses, increase demand for goods and services, and contribute to broader economic growth through increased domestic spending.”
The labour body also opposed the proposed 25 percent excise duty on mobile phones and cellular devices contained in the Bill, warning that the tax could slow Kenya’s digital economy and increase the cost of communication and online work tools.
COTU further supported proposed restrictions on gratuity tax exemptions tied to employees serving under continuous contracts for at least three years, saying the measure could strengthen long-term employment relationships and reduce abuse of pension-related tax incentives.
The union additionally urged Parliament to establish a legal framework protecting gig economy workers through portable social protection benefits, fair dispute resolution systems, and safeguards against arbitrary digital platform deactivations.
Its proposals will now be reviewed by the National Assembly Finance and National Planning Committee as lawmakers continue receiving stakeholder submissions before debate and amendments to the Finance Bill 2026.
