The ongoing push by MPs and the wider general public for a review of the taxation regime may come to nought after the Treasury Cabinet Secretary John Mbadi dismissed the drive as misguided, insisting the current taxation policies are not punitive.

Mbadi, who spoke to MPs in Naivasha specifically defended the Housing Levy and the Social Health Authority (SHA) contribution which he described as good ideas that have only been misrepresented as “an excessive taxation by opposition”.

Last week, Mbadi was at pains to explain to MPs how the government intends to lower the cost of living at a time when Kenyans are being overtaxed.

While addressing the National Assembly Mid-Term Retreat in Naivasha on Friday, the CS maintained the Social Health Insurance Fund (Shif) and the Housing Levy were not a scheme to expose salaried Kenyans to paying more taxes.

 “Over-taxation is also a narrative that I think has been driven and it is now sinking. Before SHA, there was NHIF and someone who was earning Sh60,000 was paying Sh1,700, so remove that from 1,785, and you are only paying Sh85 more. And it is said that this government is over-taxing,” he told MPs. 

While addressing members of the Bunge la Wananchi at Jeevanjee Gardens yesterday, Mbadi, who was accompanied by Kenya Revenue Authority (KRA) Board chairman Ndiritu Muriithi, said Kenyans have constantly raised concerns about how bad the economy was performing such that despite paying hefty taxes.

Business stagnation

“When you talk to Kenyans now, what is on the lips of everybody is that we are being overtaxed. And that the resources that we give the government, we don’t see the value because services are not being rendered,” he stated.

He said though the economy is improving, citizens are yet to have money in their pockets due to stagnation in the business sector, which is no longer creating jobs.

According to Mbadi, for a while now businesses have not been expanding because the government has been borrowing money expensively and, therefore, banks also loan money to the private sector even more expensively.

The CS said the majority of rich Kenyans have been evading taxes including landlords and professionals like doctors who pay the least of personal income tax despite overcharging for their services.

He said that KRA is in the process of developing a system that will monitor people’s earnings as the agency focuses on expanding the tax base to catch tax evaders

“They will see you wherever you are and whatever you are doing then they call you for a conversation. We tell you, we have already seen you. You are not paying some taxes. Can you tell us the plan now you have with us to pay it?” he explained.

To demonstrate how the taxation policy was not in any way exorbitant, Mbadi used a case of a Kenyan earning a monthly income of Sh60,000 saying the combined taxes the said Kenyan pays for the two taxes amounts to Sh2,550, a figure he said was “too little.”

He explained that without the deductions, individuals would have surrendered at least 30 per cent of their income to other taxes.

“If you are earning Sh60,000 a month, the additional taxes you pay are the Housing Levy calculated at 1.5 per cent and SHA at 2.75 per cent of gross pay. The two combined amounts to 4.25 percent, which is Sh2,550,” said CS Mbadi.

The CS compared the current deductions to the previous regime under the National Hospital Insurance Fund (NHIF) that replaced SHA, saying that a Kenyan earning Sh60,000 previously paid Sh1,700 each month.

Opposition onslaught

“When you remove that from the current deduction of Sh1,785 for someone earning Sh60,000 salary a month, you are only paying Sh85 more. Is that over-taxation?” he asked, adding that the government will now expose this narrative so that people can understand that it is not as bad as it is being portrayed.

His sentiments come at a time when ousted Deputy President Rigathi Gachagua and a number of opposition lawmakers have launched an initiative to rescue the payslip and restore dignity to it dubbed ‘Operation Okoa Payslip’.

Wiper leader Kalonzo Musyoka has also been on record, faulting the government, following the adoption of the Affordable Housing Levy Act.

Last year, President William Ruto was forced to withdraw the Finance Bill following protest from youths.

“There have been complaints about salaries and how Kenyans are over taxed. I don’t want to talk about the National Social Security Fund (NSSF), because this is actually a savings,” Mbadi said

The NSSF will implement the 2013 six per cent increase in contributions, with employees and employers expected to match the amounts equally.

From February 1, minimum monthly contributions rose from Sh420 to Sh480, while high-income earners saw their contributions double from Sh2,160 to Sh4,320.

Mbadi is expected be present the Budget Policy Statement (BPS) before Parliament, outlining the government’s expenditure plans for the next financial year 2025/2026 by Friday this week. Before his appointment, Mbadi was vocal in exposing the government’s plan to increase the Road Maintenance Levy (RML) from Sh18 a litre to Sh25.