Cooperative members protest tax on dividends
Members of the cooperative movement in Embu County have raised concern that increasing tax on member dividends could hurt Saccos and the saving culture in the country.
The co-operators urged the government to consider lowering tax rate on member dividends.
They accused the government of multiple taxation that drains income thus killing the saving culture and contributes to poverty.
The income tax changes that took effect last month will see taxes on member dividends rise from five to 10 percent as well as withholding tax rate applicable to the dividends payable by a Sacco as an institution.
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KRA will be taking away 20 percent from the dividends of each Sacco member compared to the 10 percent it previously took.
Speaking during RAA Elites Sacco Society annual general meeting at St. Stephen ACK Kagaari church Runyenjes, they complained the government was punishing people for saving.
Led by the Sacco’s vice chair Joel Mugane, they said the government had many other taxes levied from its citizen and that increasing tax on dividends was ill informed.
“The rate of youth enrollment in the Sacco is currently at 40 percent. We fear the rate of savings would drop if the taxes on dividends continue,” he said.
Peter Njagi a member, said young people were not economically stable and that their dividends should not be overtaxed.
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Loise Mwende, 23, said following massive training and appeal by leaders to form or enroll to existing Saccos, youth had heeded to the call but they could stop saving following the taxation.
They said Saccos were the only institutions that can lend to low income earners at low interests adding that overtaxing them would kill the sector.
A cooperative official Anid Kariuki said enrollment of women and youth members was still low hence urged more to join the cooperative movement.