Main Menu

Matatu industry players a tax source that is yet to be explored

Myriad studies over the recent past show that more than 70 per cent of Kenyans rely on public service vehicles, especially matatus, for transport. Interestingly, even Kenyans who own personal cars often prefer public means.

Some years back, regulating this industry was perceived a hard nut to crack, which, in turn, led to widespread cases of gross misconduct among the operators to the extent that it accounted for a substantive number of road accident fatalities.

However, as Transport minister, the late John Michuki, famed for the ‘Michuki rules’, proved the country wrong; he demonstrated that the industry, like any other, could be regulated.

There have been other subsequent major regulatory strides made to streamline the industry — such as the order by Michuki’s successor Amos Kimunya that all matatus be registered with a sacco.

REVENUE GENERATION

Besides employing thousands of Kenyans, millions of shillings change hands in the matatu industry everyday.

However, despite the incredibly high revenue generation, just a paltry amount finds its way into the national government coffers in the form of advance taxes payable at the beginning of the year.

More than 90 per cent of the employers in this vibrant industry pay their crews on a daily basis — as opposed to monthly, as is the case with other employers.

If you compute what an average matatu driver pockets in a day, for instance, it translates to more than Sh23,000 a month — way above the lowest Pay As You Earn (PAYE)-taxable threshold.

The National Treasury last year set the lowest PAYE bracket at Sh13,486 with effect from January 1, 2018. This means any employee who earns above that pays tax.

If it roped in the matatu crews’ income, the Kenya Revenue Authority (KRA) would collect more from the PAYE tax head. There is, therefore, a need for Parliament to pass a legislation for terms of service for matatu crews with an eye on taxation.

Matthew Mworia, Nyeri.

The monthly review of petroleum product prices by the Energy Regulatory Commission (ERC) is hurting Kenyan workers.

It does not reflect the mileage rates for workers, for example, whose rates are fixed for a very long time and cannot be changed since it’s negotiated in the CBA.

The latest review, with the intended 16 per cent VAT, will hurt the motorist and even public transport even more, given that matatu operators have given notice to increase fares.

The price of petrol is at a 48-month high; increasing it will have a snowballing effect across the economy. Petroleum products will hit the highest price in Kenya this month, contradicting the favourable economy promised by the government.

Kolil Kosgey, Deputy Secretary General, Kenya Electrical Trades and Allied Workers Union (Ketawu).