Civil Servant Unions Threaten Strike Over New Housing Tax, Urge Rejection of Finance Bill 2023

by | May 9, 2023 | Business, News | 0 comments

Civil servant unions across the nation are warning the government of potential industrial action if their proposed 3% salary deductions for a mandatory housing fund contribution move forward. The unions argue that the tax, as stated in the Finance Bill 2023, will further reduce already strained salaries of employees grappling with the high cost of living.

Kenya University Staff Union Secretary-General Charles Mukhwana emphasized that this new tax will add to the financial burden of public sector workers, whose pay has remained stagnant despite the rising cost of living. Dr. Mukhwana criticized the government for excessive taxation of public sector workers while failing to sufficiently target those in the private sector.

Mukhwana called for the rejection of the proposed amendments in the Finance Bill 2023, asserting that the housing fund levy was originally intended to be voluntary. He noted that the new levy, combined with other deductions, would result in total deductions of 52% of an employee’s monthly earnings, with the remaining 48% still subject to a 16% value added tax on purchases of goods and services.

University Academic Staff Union Secretary-General Constantine Wasonga and Kenya Medical Practitioners Pharmacist and Dentists Union (KMPDU) Secretary-General Davji Bhimji both condemned the new levy as over-taxation. Dr. Wasonga expressed frustration with the lack of commensurate services for the taxes paid, while Dr. Bhimji highlighted the potential impact on doctors, who could see more than Sh20,000 deducted from their basic salaries.

As a response, the unions demand the rejection of the proposed amendments in the Finance Bill 2023, a reduction in taxes imposed on workers, and engagement with worker representatives in the Public Service Sector. They also call for fast-tracking negotiations and the implementation of pending Collective Bargaining Agreements (CBAs).

The unions plan to march to Parliament during the week of May 25th, delivering a petition demanding worker protection from unnecessary taxes. If Parliament does not act accordingly, the unions warn that industrial action may follow.

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