EDITORIAL: Taxing pensions bad idea

One of the most unpopular proposals in this year’s budget is the decision to remove the tax exemptions for retirees. It’s hardly surprising that the senior citizens, who stand to lose as the taxman pursues them in retirement, are up in arms and do not have any kind words for Treasury Cabinet Secretary Ukur Yatani. He is, of course, the one who unveiled the measures that see the retirees, aged 65 and above, get reduced dues should Parliament approve the proposal.

Granted, the government must raise revenue to plug its huge budget deficits. However, these are difficult times, what with the devastation caused by the coronavirus pandemic. The retirees see this as a scheme to make their lives more miserable despite having sacrificed a lot. While in employment, they paid taxes and something was put aside to tidy them up during retirement, but it is what the taxman now wants to snatch from them. In other words, the retirees feel that this move amounts to double taxation.

Mr Yatani has reintroduced proposal MPs rejected in the Tax Amendment Act passed in April to cushion businesses and workers against the dire effects of Covid-19. Should the MPs endorse it, the retirees will pay at least 10 per cent on their monthly pension of Sh33,333 or 25 per cent for amounts higher than Sh100,000.

While paying taxes is a civic responsibility, it should be fair. This is a group that is faced by old-age diseases with substantive spending on medical care. After leaving employment, the retirees must find alternative medical schemes. It’s understandable that the senior citizens have condemned this as robbery by a money-hungry government. Raiding the retirees’ pensions could only be justified as a last resort after the wanton wastage in public spending and tax evasion are curbed.