Speaking in a recent interview, Kenya Bankers Association CEO Raimond Molenje cautioned that over-reliance on a small group of formally employed taxpayers is unsustainable and could have far-reaching consequences.
“If we continue with this trend of every levy, every tax, every charge going to salaried workers, we risk weakening the economy,” Molenje warned.
According to him, excessive deductions reduce disposable income, limiting spending power among workers—a key driver of economic growth.
He emphasized that a stable economy cannot depend on a shrinking pool of salaried individuals and urged the government to focus on expanding employment opportunities instead.
“We need to be deliberate in creating jobs so that more people can contribute to the tax base,” he said.
Molenje explained that increased employment would not only ease the burden on current taxpayers but also stimulate consumption, boost production, and support growth in key sectors such as manufacturing.
“We are urging the government to create space for more Kenyans to get employed so that revenue collection is broadened without overburdening those already paying taxes,” he added.
Employers Also Raise Concern
The concerns by bankers come shortly after similar warnings from the Federation of Kenya Employers (FKE).
In a statement issued in March, FKE CEO Jacqueline Mugo called for an urgent review of statutory deductions affecting both public and private sector employees.
She noted that the combination of high taxes, rising living costs, and compliance obligations has significantly reduced take-home pay, making formal employment less attractive.
“The burden of taxation and deductions is squeezing businesses and reducing workers’ earnings,” Mugo said.
According to FKE, the impact is already being felt across the economy. A recent survey cited by the organization revealed that employment levels have dropped by about 12 percent, with reduced hiring reported in sectors such as manufacturing, retail, hospitality, transport, and financial services.
Mugo further warned that businesses are struggling with rising operational costs, including high energy prices, increased wage demands, and complex regulations.
“These pressures are forcing many firms to freeze hiring or restructure,” she explained.
Call for Policy Shift
Both bankers and employers are now calling for a shift in government policy—from increasing taxes to creating a more enabling environment for job creation and business growth.
They argue that broadening the tax base through increased employment would be a more sustainable approach than placing additional pressure on existing taxpayers.
The growing concerns come at a time when many Kenyans are already grappling with high living costs, raising questions about the balance between revenue collection and economic stability.
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