Treasury Cabinet Secretary John Mbadi has revealed that Kenyans earning below Ksh30,000 per month are set to benefit from reduced taxation, following consultations with President William Ruto, who has approved the proposal in principle.
Speaking on Sunday, February 1, during an address at Kiambu National Polytechnic, Mbadi said the government had acknowledged that heavy taxation on low-income earners was hurting both families and the wider economy.
According to the CS, the administration is keen on ensuring that workers at the lower end of the income scale retain more disposable income, which he believes will help boost demand in a struggling economy.
“We are going to reduce the tax. The government has decided, and after discussions with the President, he has agreed. We want to put something back into your pockets so that we can stimulate demand because the economy is under pressure,” Mbadi stated.
He explained that the country’s economic health is closely tied to grassroots spending, noting that millions of Kenyans rely on monthly wages to meet basic needs.
When disposable income is limited, consumption declines, affecting businesses and slowing economic growth.
Mbadi highlighted that employed Kenyans are currently subject to multiple statutory deductions, including Pay As You Earn (PAYE), National Social Security Fund (NSSF) contributions, Social Health Authority (SHA) deductions—formerly NHIF—and the housing levy.
He argued that for workers earning Ksh30,000 or less, these deductions significantly reduce take-home pay, leaving many struggling to afford essentials such as rent, food, transport, and school fees.
“How does the government continue taxing someone earning Ksh30,000 when that person must pay rent, transport, and support a family? In the end, they are left with almost nothing,” he posed.
The proposed tax relief is expected to ease financial pressure on low-income households and could result in increased spending power across local markets, particularly in informal and small-scale businesses that depend heavily on daily consumer activity.
Mbadi’s remarks come at a time when the Kenya Revenue Authority (KRA) is intensifying efforts to expand the tax base and improve compliance ahead of the June 30 annual filing deadline.
Last week, KRA Deputy Commissioner Patience Njau announced that the authority had temporarily suspended the filing of nil returns until the end of March. The move, she said, is intended to convert nil filers and non-filers into active taxpayers.
During the suspension period, KRA is conducting audits across several areas, including income tax records, withholding taxes, electronic Tax Invoice Management System (eTIMS) data, and customs transactions, to identify individuals and businesses operating outside the tax net.
KRA data shows that while approximately 22 million individuals are registered with KRA PINs, only about 8 million are active taxpayers. Of these, just 4 million consistently meet their tax obligations.
The contrast between government efforts to widen the tax base and the planned relief for low-income earners highlights a delicate balancing act—boosting revenue collection while avoiding overburdening vulnerable workers.
If implemented, the proposed tax cuts could mark a significant shift in fiscal policy, signaling a greater focus on protecting low-income earners while relying on broader compliance and economic growth to sustain government revenues.
Details on how the tax relief will be structured and when it will take effect are expected to be outlined in upcoming policy statements or the next budget cycle.
Mbadi highlighted that employed Kenyans are currently subject to multiple statutory deductions, including Pay As You Earn (PAYE), National Social Security Fund (NSSF) contributions, Social Health Authority (SHA) deductions—formerly NHIF—and the housing levy.
He argued that for workers earning Ksh30,000 or less, these deductions significantly reduce take-home pay, leaving many struggling to afford essentials such as rent, food, transport, and school fees.
“How does the government continue taxing someone earning Ksh30,000 when that person must pay rent, transport, and support a family? In the end, they are left with almost nothing,” he posed.
The proposed tax relief is expected to ease financial pressure on low-income households and could result in increased spending power across local markets, particularly in informal and small-scale businesses that depend heavily on daily consumer activity.
Mbadi’s remarks come at a time when the Kenya Revenue Authority (KRA) is intensifying efforts to expand the tax base and improve compliance ahead of the June 30 annual filing deadline.
Last week, KRA Deputy Commissioner Patience Njau announced that the authority had temporarily suspended the filing of nil returns until the end of March. The move, she said, is intended to convert nil filers and non-filers into active taxpayers.
During the suspension period, KRA is conducting audits across several areas, including income tax records, withholding taxes, electronic Tax Invoice Management System (eTIMS) data, and customs transactions, to identify individuals and businesses operating outside the tax net.
KRA data shows that while approximately 22 million individuals are registered with KRA PINs, only about 8 million are active taxpayers. Of these, just 4 million consistently meet their tax obligations.
The contrast between government efforts to widen the tax base and the planned relief for low-income earners highlights a delicate balancing act—boosting revenue collection while avoiding overburdening vulnerable workers.
If implemented, the proposed tax cuts could mark a significant shift in fiscal policy, signaling a greater focus on protecting low-income earners while relying on broader compliance and economic growth to sustain government revenues.
Details on how the tax relief will be structured and when it will take effect are expected to be outlined in upcoming policy statements or the next budget cycle.
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