Tag: Kenyan tax news

No New Taxes in 2025? Treasury CS John Mbadi Says ‘Enough Is Enough’

Posted on by Kibaki Muthamia

In a rare moment of fiscal relief, Treasury Cabinet Secretary John Mbadi has given Kenyans something to breathe easy about: no new tax hikes in the upcoming Finance Bill 2025.

Yes, you read that right – no adjustments to Value Added Tax (VAT), employment taxes, or other key levies.

CS Mbadi during a recent press briefing in Nairobi (Image: Files)

Speaking candidly with the Bunge la Wananchi caucus in Nairobi on February 3, Mbadi made it clear – the government has hit its taxation ceiling.

“We cannot overtax Kenyans anymore,” he declared. “There’s no more room for additional taxes, especially on employment income. Not under my watch.”

This announcement comes as a small but notable relief for many Kenyans already grappling with multiple deductions – from the Social Health Insurance Fund to the Affordable Housing Levy and other statutory contributions that chip away at take-home pay.

Speaking of the Affordable Housing Levy…

Let’s not forget that back in October 2023, the government secured court approval to enforce the 1.5% levy on gross salaries, with employers matching that amount – bringing the total deduction to 3%.

So while Mbadi’s declaration might ease fears of new taxes, the deductions already in place aren’t going anywhere.

Pension Funds Get a Break

On the bright side, Mbadi is also championing an amendment to the Pensions Fund Act, aiming to exempt pension savings from taxation.

His reasoning? A mix of personal and public interest:

“When I retire, I’d like to receive my pension in full – without surrendering a chunk of it to taxes. And I believe every Kenyan deserves the same.”

This move isn’t just about lightening the tax load.

It’s also designed to encourage a savings culture and offer better protection for retirees.

What This Means for You

While there’s no promise of tax reductions, the fact that the government is pressing pause on new tax hikes is significant.

It reflects growing recognition of the financial strain many Kenyans face.

But here’s the kicker: no new taxes doesn’t mean no existing burdens.

Deductions for health insurance, housing, and pensions will still apply. The real question is – will these measures be enough to ease the cost of living?

VAT on Fuel to Increase, Prices of Basic Commodities to Soar

Posted on by Ozymandias

The prices of basic commodities are expected to go up from July 1, 2023, after Parliament voted to pass the proposed 16 percent Value Added Tax (VAT) on fuel.

The VAT on petroleum products has been doubled, which is likely to result in an overall increase in the prices of goods that are transported to the market. This will include the fare and electricity cost.

The decision to increase the VAT on fuel was made by Parliament on June 21, 2023. The vote was 184 in favor of the increase and 88 against.

The increase in the VAT on fuel is expected to have a significant impact on the cost of transportation. This will be passed on to consumers in the form of higher prices for goods and services.

The impact of the increase in the VAT on fuel will be felt most by low-income households, who rely on public transportation and kerosene for cooking and lighting.

The government has justified the increase in the VAT on fuel by saying that it will ensure uniformity. Currently, the VAT on fuel varies depending on the type of fuel. The government says that the increase in the VAT will bring all fuels under the same tax regime.

However, critics of the increase in the VAT on fuel say that it will unfairly burden low-income households. They argue that the government should have found other ways to raise revenue, such as increasing taxes on the wealthy.

The increase in the VAT on fuel is a significant development that will have a major impact on the Kenyan economy. It remains to be seen how consumers will react to the higher prices.