Treasury CS John Mbadi has defended the government’s tax policies, saying they are not as burdensome as critics suggest, especially for middle-income earners.
Mbadi, who was among ODM’s top guns tapped by President William Ruto, dismissed claims of over-taxation as a misleading narrative.
“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,” the CS said.
In a detailed presentation seen by the Star, Mbadi broke down the tax implications for individuals earning Sh60,000 per month, a salary bracket often associated with Kenya’s middle class.
The presentation, on the state of the economy, was made to MPs during the National Assembly Mid-Term Retreat in Naivasha. Mbadi said the introduction of the Housing Levy and the Social Health Insurance Fund have been misrepresented as excessive taxation.
“If you are earning Sh60,000, the additional taxes you pay are the Housing Levy at 1.5 per cent and SHA at 2.75 per cent. Combined, this amounts to 4.25 per cent, which is Sh2,550,” he stated.
Without these deductions, he added, individuals would have surrendered 30 per cent of their income to other taxes.
“Those who are hurt by the taxes are those that Kenyans may call earn super-salary, but when you start adding it, you don’t see it as super. But the middle class, not so much.”
With the amendments, 30 per cent is retained and the only loss is 70 per cent of the Sh2,550, which translates to Sh1,785.
Mbadi compared the current deductions to the previous National Hospital Insurance Fund contributions, to which individuals earning Sh60,000 paid Sh1,700 monthly.
“When you remove that from the Sh1,785, you are only paying Sh85 more. Is that over-taxation?” he posed.
The Finance minister’s remarks come amid growing public discontent over the rising cost of living and increased deductions from salaries.
Critics have accused the President William Ruto-led government of burdening citizens with multiple levies, including the controversial Housing Levy and SHA, which were introduced as part of the 2023 Finance Act.
However, Mbadi insisted that the narrative of over-taxation has been exaggerated and urged Kenyans to look at the numbers objectively.
“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.”
Mbadi’s defence of the tax regime climaxes the government’s efforts to fund its ambitious development agenda, including affordable housing and universal healthcare.
However, the opposition and some economists
have argued that the cumulative effect of these levies,
coupled with rising inflation, is squeezing disposable
incomes and hurting economic growth.
