The Central Organisation of Trade Unions (COTU-Kenya) has submitted a proposal on the Finance Bill 2026, demanding an immediate overhaul of the Pay As You Earn (PAYE) tax structure.

The prayer is for urgent tax relief targeted at low- and middle-income earners making up to Sh60,000 a month.

According to COTU’s projections, rewriting the tax code to ease the burden on these workers would inject over Sh31 billion back into the economy, unleashing a wave of disposable income capable of boosting consumer spending, supporting struggling local businesses, and stimulating job creation.

The call for reform comes at a time of desperation for the country’s labor force.

Led by Secretary General Francis Atwoli, the union painted a grim picture of salaried employees trapped between stagnant wages and a rising tide of financial obligations.

Over the years, a volatile mix of high inflation, soaring fuel prices, and expensive food and transport costs has steadily chipped away at household purchasing power.

To make matters worse, workers have seen their take-home pay aggressively cannibalized by a growing list of mandatory statutory deductions.

Today’s formal sector employees do not just shoulder PAYE; they are also hit with the Affordable Housing Levy, Social Health Authority (SHA) contributions, and enhanced National Social Security Fund (NSSF) deductions, a combination that Atwoli warns has severely fractured household stability.

COTU further expressed disappointment over the exclusion of income tax relief from the current Finance Bill.

Mr Atwoli castigated the state for failing to act, pointing out that both the Executive and the National Treasury have repeatedly acknowledged how deeply workers’ incomes have been eroded, yet have offered no meaningful relief in return.

He warned that the government can no longer rely on an exhausted, over-taxed workforce to keep the economy afloat while ignoring the plight of the formal sector, which remains one of the most heavily taxed segments of society.

To permanently fix this imbalance, COTU is lobbying for three structural remedies: a complete revision of current PAYE bands, an upward adjustment of the tax-free threshold to protect the lowest earners, and the introduction of automatic annual inflation adjustments.