Sacco savers yesterday took to social media to express anger after realising that the government will be taking 20 per cent of their dividends in tax up from 10 per cent.
Reacting to a story in the Star yesterday titled ‘Sacco savers dividends drop as tax takes effect’, angry members and social media users accused the government of multiple taxation that drain incomes, kills the savings culture and hence poverty.
‘’These taxes will be the end of us. It is like the government want to take every coin we earn. Why impose multiple taxes on a single income? Muriithi said on Twitter.
Nyakwar Ogila threatened to stop Sacco savings, saying his money is safer under the mattress than going through any formal savings channels.
Roslyne Nyaboni termed the increased tax as a rip off by the government.
‘’Blatantly day light theft, this is too punitive to Sacco savers,’’ said Zablon Mbogo.
Felix Olick, a member of Queensway Sacco said increased taxes on Sacco earnings is a deliberate ploy by the government to kill poor man’s way of saving.
‘’Saccos are only institutions that can lend peasants at affordable fee. More taxes will kill the sector, sending people at the bottom of economic pyramid deeper into poverty,’’ Olick said.
The new tax doubles taxes on members’ dividends from five to 10 per cent as well as withholding tax rate applicable to the dividends payable by a Sacco as an institution.
Queensway Sacco chairman James Njoroge termed increased taxes on dividends as unfortunate, saying that the government was punishing people for saving.
‘’Instead of encouraging people to save and create local financial pool to spur the economy, this government is imposing taxes. It is unfortunate. We don’t know how to break the news to our members,’’ Njoroge said.
Nation Sacco chief executive Jacob Kimathi asked the government to go slow on taxes to encourage a saving culture in the country.
On Monday, Co-operatives Alliance Kenya chief executive Daniel Marube said the deduction hurt painful already shouldering a heavy tax burden.