Season of baits: Inside Ruto tokenism plot targeting payslip holders

Are empowerment forums such as the ongoing Nyota Yangu, and others like the now nearly forgotten Hustler Fund, genuine initiatives to uplift Kenyans, or are they simply campaign platforms for the 2027 presidential election?

Another programme that posses an eerie political angle include the women and youth empowerment campaigns mounted by his deputy Kithure Kindiki last year.

Default rates in all funding programmes touted as drivers for financial inclusion have been found to be extremely high, raising questions on their viability and the real intentions of such programmes months to the next election.

President Ruto last week also introduced another shocker, when he announced that all Kenyans earning below Sh30,000 will be exempted from Pay-As-You-Earn (PAYE) deductions, another populist decision that critics quickly dismissed as a campaign gimmick.

“The government is selling Kenyans a lie wrapped in election season sugar coating by claiming that 1.5 million workers earning 30,000 and bellow will be exempted from PAYE, but at a glance the tax code exposes the truth because those earning below 24,000 were already effectively PAYE exempt through existing tax bands and reliefs,” says Prof Gitile Naituli.

He reminded the President that tax is not about headlines but about honesty, fairness, predictability and long term economic well-being, instead of moving the exempting ceiling slightly upwards and marketing it as a breakthrough, when in fact low income earners are trapped in an economy defined by inflation, stagnant wages, rising fuel costs, punitive consumption taxes, housing levy deductions and ever expanding statutory contributions.

From a Head of State who spoke tough of his decision to claim a pound of flesh — and sometimes more — from taxpayers, maintaining his stance of unlocking the country from shackles of debt, Kenyans are now looking at a new version of President Ruto that truly embodies the Zachaeus (Zakayo) character in the Bible. Like Zakayo, the tax collector, who after dinner with Jesus, went mellow and offered to return double to those he had collected more than he should have, the President is also on a giving spree.

“That is how progressively we are going to make sure we deal with the cost of living,” said President Ruto during a meeting at State House as he addressed aspirants under the ruling party, United Democratic Alliance (UDA).

These sentiments are contrary to how the President spoke as he defended the affordable housing levy (AHL) that disproportionately targeted salaried workers during his early days in office.

One million

“Us who are salaried have to be considerate of those who are not employed. What is wrong with contributing to having one million youth get jobs every year? We are not better off because we are employed. That job you have, and this position I hold, can also be done by another 5,000 youth out there, “ said Ruto. 

In his time as President, apart from introducing the 1.5 per cent AHL on workers’ gross pay, he also introduced new tax PAYE bands through the National Treasury, Cabinet Secretary Njunguna Ndung’u of 32.5 per cent for those making between Sh500,000 and Sh800,000 and 35 per cent for those making Sh800,000 and above. 

Effectively, when these taxes are added to the 1.5 per cent AHL, the 2.75 per cent Social Health Insurance Fund (SHIF) that replaced the Sh1,700 National Health Insurance Fund (NHIF), and the enhanced National Social Security Fund (NSSF) that is graduated according to income, several Kenyan workers find themselves going home with 40 per cent less. 

This new stance by Ruto, while it may bring relief to some Kenyans, there are political nuances in his pronouncements. 

“There is more to it,” says Innocent Musumbi, a political and economic commentator.

“We are approaching 2027, and like any other politician, the President must be able to appease his turf as the chief hustler.”

This move is expected to possibly pacify some 700,000 workers whom he earlier targeted for those enhanced taxes during his first Finance Act in 2023. 

Sandeep Main, Tax Partner and Head of Private Enterprise at KPMG in Africa, says while the proposal to cut on PAYE has been fronted, Kenyans still have NSSF, SHIF, AHL to pay. 

Further, he pointed out, that the amount of savings done by those targeted for exemption is about Sh600. The biggest question, however, is how this proposal would be applied equitably.

“One of the cannons of taxation is equity. Companies pay taxes at 30 per cent. Why should an individual earning above Sh800,000 pay 35 per cent? These are some of the questions we must ask ourselves,” he says. 

For hustlers who are also in business, who form the majority of the working class participating in the informal economy, Main asks how this proposal would work. 

He envisions that the Kenya Revenue Authority eTims system, which demands traders issue taxman-approved invoices, should be used in this case to ensure they also benefit. 

For example, someone in business who issues an invoice and also earns under Sh360,000 annually, should they pay 30 per cent or will they be considered for the exemption since they earn less than Sh30,000 a month? 

Ruth Kinyanjui, an economic analyst, says if implemented, the cuts on PAYE is going the best thing that ever happened in this country. 

That means people at the bottom of the economic pyramid are going to have more disposable income to consume and, that is going to improve the spending pattern in the economy which has not been happening.

“But if the formal sector is going to be considered, where do we draw the line in the informal sector?” she poses. “How do we determine who earns less than Sh30,000 in the informal sector?”

The Federation of Kenya Employers (FKE), however, welcomes the proposal, which will feature in a Tax Laws (Amendment) Bill, 2026, being prepared by the National Treasury. 

FKE Executive Director and Chief Executive Jacqueline Mugo calls it a positive step that will significantly improve Kenyans’ take-home pay. 

“We know the low-income earners struggle, “ she says. 

She says the government is making a clear step to increase Kenyans’ spending power.

“I don’t think it is a loss for the government. It is a win-win,” she adds.