The Central Organisation of Trade Unions (COTU-Kenya) has criticized the government for not implementing long-awaited Pay As You Earn (PAYE) reliefs in the newly tabled Finance Bill, 2026.
COTU-Kenya Secretary General Francis Atwoli said the government has failed to act despite public acknowledgments from both the Executive and the National Treasury that workers’ disposable incomes have been severely eroded.
Atwoli argued that the delay in passing the reforms shows Parliament must closely re-examine the wider tax burden placed on salaried Kenyans.
“The state can no longer rely on an exhausted workforce to sustain the economy through aggressive taxation,” Atwoli said in his submission to the Finance Bill 2026.
He added that workers should not have to fund national development at the cost of their survival, welfare, and economic dignity. He urged lawmakers to strike a realistic balance between raising revenue and protecting households
The outspoken trade unionist laid out a detailed proposal for tax relief focused on low- and middle-income earners.
COTU wants the government to overhaul the PAYE structure for anyone earning up to Sh60,000 per month. The union said this income bracket forms the backbone of Kenya’s productive workforce and consumer economy, yet it carries the heaviest share of inflation’s impact.
COTU’s Economic and Education Department estimates that putting the targeted PAYE relief in place would immediately inject more than Sh31 billion into the economy as usable household income.
Atwoli said the government should treat the relief not as a one-off social measure but as a strategy to drive economic growth. He argued that when workers keep more money, they spend more, businesses expand production, and more jobs emerge.
“Ultimately, the government will indirectly recover this revenue through heightened economic activity and increased domestic spending,” he said.
To deliver that relief, COTU is calling for a full revision of PAYE bands for workers earning up to Sh60,000. It wants the tax-free threshold raised, payroll taxes on middle- and lower-income earners reduced significantly, and PAYE bands adjusted automatically each year for inflation to prevent bracket creep, when workers get pushed into higher tax brackets purely due to inflation.
COTU (K) said it supports several progressive provisions in the Finance Bill, 2026, including steps to strengthen retirement protection, promote local manufacturing, ease pressure on fuel pricing, and encourage infrastructure development. However, it said it will oppose a range of consumer-facing taxes.
Most notably, the union is strongly against the newly proposed 25% excise duty on mobile phones. It also objected to moves that expand indirect taxes and introduce new levies targeting digital platforms, warning that the measures, along with changes affecting manufacturing and production, will drive consumer prices higher.
COTU (K) said it will fight proposals that cut into workers’ purchasing power, weaken digital inclusion, or threaten job creation without a matching increase in wages.
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