Treasury Cabinet Secretary John Mbadi has defended the government’s new tax policies, claiming that they have resulted in improved payslips for Kenyan employees, particularly those in the middle-income bracket. Mbadi made the remarks during a discussion on NTV, where he emphasized that the recently implemented tax reliefs would take effect from January’s payslips.
In a bid to clarify the government’s stance on the ongoing debate about taxation, Mbadi said that the middle class, which he defines as those earning between KSh60,000 and KSh150,000 per month, would see tangible benefits from the new tax laws. He acknowledged public concerns regarding the perceived thinning of payslips, but asserted that these concerns are often exaggerated.
“We have improved people’s payslips; it is only that sometimes we overplay this discussion around payslips getting thinner,” Mbadi remarked. He went on to say that the government’s changes to the tax law, including the introduction of the Housing Levy and the Social Health Insurance Fund (SHA), should be viewed as a relief rather than a burden for employees. He also clarified that the SHA would not result in double taxation, contrary to some claims.
In a detailed breakdown, Mbadi explained the tax implications for individuals earning KSh100,000 per month, which is often considered the threshold for middle-class earners in Kenya. He compared the previous and current deductions for individuals in this salary bracket, stating that the Housing Levy and SHA would result in a much lower deduction than previously anticipated. For example, before the new tax laws, the SHA would deduct KSh2,750 from a salary of KSh100,000. Under the new tax regime, the deduction is now KSh1,925, a reduction of KSh825.
Mbadi’s comments come amid rising public discontent over the increased cost of living, with many critics arguing that multiple levies, including the Housing Levy and SHA, are placing an additional burden on ordinary Kenyans. Despite this, Mbadi remained firm in his defense of the government’s tax policies, stating that the changes are designed to ease the financial pressure on middle-class earners.
“The taxes are not as burdensome as critics suggest,” he said. “Those who are hurt by the taxes are those that Kenyans may call earn super-salary, but when you start adding it up, you don’t see it as super. But for the middle class, not so much.”
As the government moves forward with its tax reforms, it remains to be seen whether the public will fully embrace the changes, particularly given the ongoing concerns over the rising cost of living.
