Kenya, 26 May 2026 - The Central Organisation of Trade Unions (COTU) has proposed a raft of tax measures for inclusion in the Finance Bill, calling on the government to introduce worker-friendly policies aimed at easing the high cost of living.
In a submission to the National Assembly’s Finance and National Planning Committee, the labour movement said the proposals are designed to protect household incomes, stimulate economic growth, and cushion Kenyan workers from rising taxation and increasing financial pressure amid tough economic conditions.
COTU strongly opposes measures that would increase the cost of living, suppress workers’ purchasing power, undermine digital inclusion, threaten employment creation, raise production costs, and place additional burdens on workers without corresponding wage growth.
The proposal, signed by COTU Secretary General Francis Atwoli, acknowledges that the Finance Bill contains several positive measures intended to broaden the tax base, strengthen tax administration, support investment, enhance infrastructure financing, and promote local manufacturing.
However, the labour movement noted that the Bill also introduces measures likely to increase the cost of living, raise production costs, burden workers, weaken purchasing power, and heighten labour market insecurity.
“COTU proposes comprehensive PAYE reforms targeted at workers earning up to KSh 60,000 per month in order to increase disposable income, stimulate domestic demand, and support economic recovery. Workers within this income bracket are among the most affected by inflationary pressures and statutory deductions, despite forming a significant component of Kenya’s productive workforce and consumer economy,” read part of the submission.
COTU further proposed the revision of PAYE bands for workers earning up to KSh 60,000, an upward adjustment of the tax-free threshold, a reduction of excessive payroll taxation on middle- and lower-income earners, and the automatic annual inflation adjustment of PAYE bands to prevent bracket creep and protect workers from inflation-driven taxation.
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The Francis Atwoli-led labour movement also supported the proposed amendment in the Finance Bill 2026 that seeks to restrict tax exemption on gratuity or similar payments made into registered pension schemes to employees engaged under a continuous contract of service for a minimum period of three years.
“COTU (K) recognises that while the proposal may attract debate within the labour market, it has the potential to promote more stable employment relationships, strengthen long-term social protection arrangements, and discourage the abuse of gratuity and pension schemes for tax avoidance purposes,” read part of the submission.
COTU strongly opposed the proposed 25% excise duty on mobile phones and cellular devices as contained in the Finance Bill 2026.
“We submit that mobile phones and digital communication tools are no longer luxury items but essential economic, educational, financial, and productive instruments in the modern economy,” the union noted.

