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Kenya’s President Uhuru Scraps Tax on Workers Benefits

President Uhuru Kenyatta has instructed the National Treasury to put aside taxation on payments of bonuses, overtime and retirement benefits for low-income earners.

The President said his directive was part of the conscious drive to continually strive to improve the living standards of Kenyans and has instructed the National Treasury to include in the 2016 Finance Bill sustainable measures for its implementation.

President Kenyatta’s directive follows a plea by the Central Organisation of Trade Unions (COTU) for the Government to save employees from taxation on payments including retirement savings.

The President, however, said that the taxation adjustment should be done in a manner that does not cause the cost of employment to increase.

“This will be done in a manner that does not place an additional burden on employers, or increase the cost of employment,” the President said.

The President, who spoke at the 2016 Employers Summit in Naivasha, also urged workers’ group COTU and the Federation of Kenyan Employers (FKE) to actualise the creation of a Centre to promote productivity.

“I urge engagement between my administration, the FKE and COTU, to consider and actualize the creation of a Center dedicated to promoting productivity much along the lines of one implemented by the Japanese Government.

The Centre will enable Kenya to tackle the question of improving living standards within the broader context of growing productivity and the economy.

At the same, the President called on the private sector to view the Government as a partner and prioritise efforts to deal youth unemployment.

He called on the private sector to play a more proactive role in giving skills to youth and creating jobs for them.

“Africa is 70% youth, but over 50% of those young people are illiterate, or unskilled, or unemployed or under-employed. None of you needs me to tell you that this status quo is dangerous,” the President said.

He also called on the business community to implement affirmative action to support the youth just like the Government has adopted procurement rules that are youth friendly.

The President said youth unemployment is at a crisis level in Africa and described the problem as an existential threat for the continent.

At the Summit, attended by representatives from more than 34 African countries, the Government was commended for making it easy to do business in Kenya.

Speakers included Safaricom’s CEO Bob Collymore and FKE chairman Linus Gitahi said the private sector is pleased with the government’s zeal to support business.

During a question and answer session moderated by Mr Collymore, President Kenyatta said the government will continue removing all impediments to doing business in Kenya.

He cited the Ministry of Lands and the Attorney General’s office as areas where more reforms have to be implemented to make Kenya more business friendly.

By Robert Muriisa.

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