Treasury Cabinet Secretary John Mbadi has dismissed claims that Kenyans are overburdened by taxation, asserting that the current system is fair and manageable. Speaking at a parliamentary retreat in Naivasha, Mbadi defended the Housing Levy and the Social Health Authority (SHA) contributions, describing the policies as well-intentioned and effective.
Addressing concerns from lawmakers over the high cost of living, Mbadi clarified that the Social Health Insurance Fund (SHIF) and Housing Levy are not designed to impose additional strain on salaried individuals.
“Before SHA, an individual earning Sh60,000 paid Sh1,700 under NHIF. With SHA, the increase is only Sh85, a negligible difference,” Mbadi explained.
He also emphasized that widespread frustration stems from the perception that Kenyans are not seeing tangible benefits from tax contributions, despite government efforts to improve services. Economic slowdown, high-interest borrowing, and limited private-sector growth are cited as factors slowing visible progress.
Tax Evasion Among High Earners
Mbadi highlighted that significant tax evasion persists among affluent individuals, including landlords and high-income professionals. To address this, the Kenya Revenue Authority (KRA) is implementing systems to monitor earnings and ensure compliance.
“Our system will track individuals regardless of profession or location. KRA will engage those with discrepancies, asking them to settle unpaid taxes,” Mbadi stated.
Clarifying Deductions
To illustrate the fairness of the current system, Mbadi gave an example of a Kenyan earning Sh60,000 per month. Total deductions for Housing Levy (1.5%) and SHA (2.75%) amount to 4.25%, or Sh2,550—considerably lower than other statutory taxes that could reach 30% of income.
Public Debate on Tax Policies
Opposition figures, including former Deputy President Rigathi Gachagua, have criticized the current taxation framework under initiatives like ‘Operation Okoa Payslip’. Wiper Party leader Kalonzo Musyoka has also opposed the Affordable Housing Levy Act, citing public resistance.
Last year, public protests over the Finance Bill led to President William Ruto retracting some proposals, particularly after youth opposition. Meanwhile, the NSSF contribution increase—from Sh420 to Sh480 for minimum earners, and from Sh2,160 to Sh4,320 for high earners—has been implemented, reflecting the government’s focus on employee savings rather than taxation.
Looking Ahead
Mbadi is set to present the Budget Policy Statement (BPS) before Parliament, detailing government expenditure plans for the 2025/2026 financial year. He reaffirmed that while concerns remain, the Housing Levy and SHA contributions are proportionate, and KRA is committed to ensuring compliance across all income levels.
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