The recent passage of the Finance Bill 2023 has sent shockwaves through the Kenyan population, particularly among the salaried workforce. The proposed measures within the bill, which Parliament has approved, have brought about significant concerns for the average Kenyan’s financial stability.
One of the most noteworthy aspects of the bill is the implementation of a three percent housing levy. This levy, which took effect last month, is aimed at supporting housing projects and initiatives. However, its impact on individual finances cannot be ignored.
For instance, an individual earning a monthly salary of Sh50,000 is now required to contribute Sh1,428 towards this housing levy. This deduction directly affects their take-home pay and subsequently influences their overall financial well-being.
Adding to this financial burden are the revisions to the National Social Security Fund (NSSF) rates. The adjustment in February saw the monthly NSSF contribution increase from a modest Sh200 to a more substantial Sh1,080.
This change, though intended to enhance social security benefits in the long run, places additional strain on the immediate financial situation of Kenyan workers.
Furthermore, the impending rise in National Hospital Insurance Fund (NHIF) contributions compounds the financial challenges faced by Kenyan citizens. The increase in NHIF rates, set to take effect in July, means that individuals will be required to pay 2.7 percent of their monthly income.
An individual earning Sh50,000 per month translates to a monthly contribution of Sh1,400, further impacting their disposable income.
When considering the cumulative effect of these deductions, such as the existing pay-as-you-earn (PAYE) tax of Sh14,280, the financial landscape for an average Kenyan becomes more concerning. These deductions collectively amount to a substantial portion of their gross income, leaving less room for discretionary spending and saving.
The rising costs of everyday essentials like rent, transportation, and education further exacerbate this financial pressure.
The Finance Bill 2023 also introduces increased taxes on crucial commodities like petroleum products. This not only directly affects the cost of fuel but also has a ripple effect on the prices of various basic goods, including food.
Consequently, the average Kenyan is faced with a double-edged challenge: reduced take-home pay due to deductions and increased expenses due to higher taxes.
In essence, the Finance Bill 2023 has triggered a substantial reevaluation of the financial landscape for the average Kenyan. The combination of increased deductions and taxes creates a formidable financial hurdle, making it imperative for individuals and families to carefully manage their budgets and expenses to maintain a semblance of financial stability. To manage financial pressure, it’s crucial to come up with saving tactics to use during these economic times.