Kenya Association of International Schools (KAIS) has warned that the private education institutions may have to lay off over 25,000 people if the government goes ahead with its plan to pass the Finance Bill 2023.
In a submission seen by Swala Nyeti , Jane Mwangi, the Head of Secretariat at KAIS stated that the plan to increase NSSF and NHIF rates in addition to the proposed Affordable Housing levy will exert inordinate financial pressure on employers, as payrolls will increase by over 6%. She echoed the sentiments of KEPSA and KAM who claim that job losses will cross the 100,000 mark if the proposals are adopted as is.
She added, “As such, schools will be forced to outsource certain services to lower paid cadres of staff – These may include teaching assistants, drivers, cleaners, gardeners, cooks, mechanics, and security personnel. In the private school sector, this will lead to the loss of over 25,000 jobs.”
KAIS also faulted proposed changes to the Income Tax Act to create a corporate tax on gross amounts received by associations outside member subscriptions, joining fees or welfare contributions.
Mwangi indicated that, according to the proposals, taxable receipts would include, for example, sponsorships for events and any fees collected for facilitation of events.
“The proposed amendment is erroneous, first because, it deems that associations ‘are carrying out businesses’, when they are, by their very nature, non-profit organizations. Secondly, the proposed tax is discriminatory. Businesses are taxed on net income. Most business associations in Kenya are unable to fund their activities from member subscriptions,” said Mwangi.
She added, “At the very least, tax should be applied on net income- after deducting the cost of hosting the event. Applying a tax to the gross receipts is discriminatory and punitive to these organizations’ that are not created for any business interest.”