Treasury Cabinet Secretary John Mbadi has come out strongly against claims that the government is overtaxing Kenyans, terming the narrative misleading and exaggerated. Speaking during the National Assembly Mid-Term Retreat in Naivasha, Mbadi presented a detailed breakdown of tax implications, particularly for middle-income earners, urging Kenyans to assess the numbers objectively.
“There is this thing of saying that we are overtaxing. I have looked at the taxes because I was trying to see how I can make the payslips better,” Mbadi stated, defending the tax policies initiated under President William Ruto’s administration.
In his presentation, Mbadi highlighted the tax impact on individuals earning KSh 60,000 per month, a salary bracket commonly associated with Kenya’s middle class. According to the CS, the additional deductions, including the Housing Levy at 1.5% and the Social Health Insurance Fund (SHA) at 2.75%, amount to a total of 4.25%, translating to KSh 2,550.
He argued that without these deductions, individuals would still be contributing 30% of their income to other taxes. He further compared the new deductions to the previous National Hospital Insurance Fund (NHIF) contributions, where a person earning KSh 60,000 paid KSh 1,700 monthly. Under the new tax structure, the additional amount paid is just KSh 85 more.
“When you remove that from the KSh 1,785, you are only paying KSh 85 more. Is that over-taxation?” he posed.
The CS’s remarks come at a time when there is growing public outcry over the high cost of living and increased salary deductions. Critics argue that the introduction of multiple levies, including the controversial Housing Levy and SHA, as part of the 2023 Finance Act, is overburdening Kenyans. Many contend that these levies, combined with rising inflation, are significantly reducing disposable incomes and negatively impacting economic growth.
However, Mbadi dismissed these concerns, asserting that the government is committed to funding its ambitious development agenda, which includes affordable housing and universal healthcare. He insisted that the notion of over-taxation has been misrepresented and that Kenyans should analyze the figures critically.
“Those of us in government will now expose this narrative so that people can understand that it is not as bad as it is being portrayed,” he remarked.
While the government maintains that these tax measures are necessary for economic growth, the opposition and economists warn that the cumulative tax burden may slow down economic recovery and weaken consumer purchasing power. The debate over taxation is likely to continue as Kenyans grapple with the economic realities on the ground.
