No More Taxes For Employed Kenyans: CS Mbadi On Finance Bill 2025

National Treasury Cabinet Secretary (CS) John Mbadi has announced that the government will not introduce additional tax adjustments targeting key taxation avenues such as Value Added Tax (VAT) and employment tax in the upcoming Finance Bill 2025 set to be submitted to the National Assembly for approval.

Speaking on Monday, February 3 during an informal engagement with the Bunge la Wananchi caucus, Mbadi explained that the move was to protect Kenyans from the burden of over-taxation, which was the case with the Finance Bill 2023.

"Take it from me, we are not increasing VAT at all. Actually, the Finance Bill of this year may not have any tax adjustments upwards in terms of rates," he asserted.

"We cannot overtax Kenyans anymore. We have reached a limit where we are saying no more space for taxation especially on employment income. You will not see any more taxes on employment income under my watch as the CS."

The Finance Bill 2025 is set to be presented to the Cabinet before April 18, 2025. After that, the CS will submit the proposals to Parliament, followed by public participation nationwide.

Finance Bills outline tax proposals that help finance the national budget. However, in President William Ruto's administration, the bills have been the main subject of sustained criticism across the country owing to proposals that threatened to eliminate the spending power Kenyans had before the Kenya Kwanza government was voted into power in 2022.

Whereas the Finance Bill 2023 drew public criticism, it was the Finance Bill 2024 that took Kenyans to breaking point and forced Gen Z to take matters into their own hands through waves of anti-government protests that eventually led to the deletion of the whole bill.

Mbadi is now faced with the tough task of ensuring that Kenyans are not tormented anymore by more taxes while seeking to fund the country's national budget. The deductions from employed Kenyans' salaries have been cruel and have come from two major channels; the Social Health Insurance Fund and affordable housing, among other statutory deductions.

On October 22 last year, the government was granted approval to proceed with the Affordable Housing Levy deductions, set at a standard rate of 1.5 per cent of an employee's gross salary or a person's gross income received or accrued, following a High Court ruling.

Additionally, employers were required to contribute an equivalent 1.5 per cent deduction from their employees' salaries, bringing the total contribution to 3 per cent.

For SHIF, a 2.75 percent deduction on workers' gross income has not made life easier for the employed Kenyan and other than reducing the appeal of having a job, SHIF has been criticised for poor service delivery and system failures.