The Federation of Kenya Employers (FKE) has warned that the imposition of punitive taxes could worsen the country’s already high unemployment rate. Speaking during the 64th Annual General Meeting of the FKE Coast Branch in Mombasa, CEO Jacqueline Mugo emphasized the urgent need for tax reforms that support both businesses and workers.
Mugo revealed that FKE had submitted a comprehensive proposal to the National Treasury, calling for a review of the existing tax regime. A key recommendation is that statutory deductions be calculated based on basic pay rather than consolidated pay to ease the financial pressure on employers and employees alike.
“We think this will alleviate the level of cash that is flowing out of people’s payrolls,” said Mugo. She also proposed a reduction of the Housing Levy from the current 1.5% to 0.5% of total earnings, noting that substantial funds had already been raised toward the government’s housing agenda.
Mugo affirmed FKE’s support for reforms aimed at reducing the tax burden on citizens and businesses, aligning with growing public concerns that the current fiscal situation is unsustainable. “Most Kenyans and the business community are looking to the government to alleviate their suffering,” she said, expressing hope that the 2025/2026 Budget will provide much-needed relief.
While acknowledging improvements in tourism and hospitality due to post-COVID-19 recovery efforts, FKE urged further liberalisation of travel policies and faster upgrades of critical infrastructure like the Mombasa–Nairobi Road.
On trade, Mugo raised concerns about Sudan’s ban on Kenyan tea imports, which has cost the sector an estimated Ksh. 2.4 billion. FKE called for urgent diplomatic intervention to restore market access.
Locally, the federation also criticized the Sh7,000 cess fee imposed by the Mombasa County Government per truck, citing it as a barrier to trade and a violation of EAC protocols. They also urged the Kenya Revenue Authority to deploy 24/7 customs services to reduce weekend cargo delays.
In light of new U.S. tariffs, FKE called on the government to strengthen trade agreements to protect Kenya’s export industries and ensure continued market access.
