Cabinet Secretary for the National Treasury and Economic Planning, John Mbadi has defended the Kenya Kwanza government’s tax policies, emphasizing that the administration was forced to impose high taxes due to the country’s deep financial crisis. He explained that when President William Ruto’s administration took office, it inherited a significant budget deficit and maturing debts, making revenue collection a priority.
Speaking during an interview on a local TV station on Wednesday, March 19, 2025, Mbadi acknowledged that taxation is never widespread but stressed that it was necessary to stabilize the economy. He highlighted that the budget deficit stood at 8.3% when Kenya Kwanza took office, amounting to nearly Ksh952 billion.
With various commercial and syndicated loans maturing between 2024 and 2028, the government had to find ways to raise funds to meet its obligations.
“No one likes taxes. Tax collectors were not loved in the Biblical times of Jesus Christ, they were considered the most sinful, I hope I am not being viewed like that. My understanding is that higher taxes do not bring prosperity. I know when Kenya Kwanza came into office, there were a lot of challenges. You are coming into an office with a budget deficit of 8.3 per cent, an office with a budget deficit of 952 billion almost a trillion and you are coming into an office with a lot of debts, commercial ones maturing in 2024, 2025, and 2026, 2027, 2028 and you have syndicated loans to pay, the temptation is to get money as much as possible from citizens come out of the hole and that is the strategy that was adopted,” he explained.
Mbadi explained that the government’s strategy was to generate as much revenue as possible from taxpayers to bridge the financial gap. He pointed out that an agreement between Kenya and the International Monetary Fund (IMF) focused on revenue mobilization, which led to increased taxation. However, he admitted that this approach had unintended consequences, such as civil unrest and economic strain.
To address these challenges, Mbadi says the government has since introduced a tax policy aimed at ensuring predictability and certainty in taxation, which has been passed by Parliament. The CS stated that the new focus is on expanding the tax base and improving tax management rather than simply raising tax rates.
Tax visibility
He emphasized that one of Kenya’s biggest challenges is tax visibility, where many capable taxpayers remain outside the tax system. The new approach aims to bring more people into the tax bracket while making tax collection more efficient.
The Treasury CS urged Kenyans to understand the reasoning behind the government’s tax policies, reiterating that the goal is to stabilize the economy and ensure long-term growth.
“I want Kenyans to understand that the agreement that was entered by Kenya and IMF was that of revenue mobilisation and therefore the strategy was to increase the taxes. But now it ended up bringing civil unrest, destroying the economy and so therefore we came up with a tax policy which has been passed by parliament and talks about tax predictability and certainty for economic growth,” Mbadi said.
Adding;
“We are changing focus from increasing taxes to expanding the tax base and improving tax management making it more efficient. The biggest challenge we have as a country is tax visibility. There are so many Kenyans out there who are capable of paying taxes but because they are not visible, they are not paying taxes.”
No more taxes
This follows a recent pledge by Mbadi that no new taxes will be introduced in 2025. Speaking during an informal engagement with the Bunge la Wananchi on February 3, 2025, The CS emphasized that the government has no intention of increasing Value Added Tax (VAT) and hinted that the upcoming finance bill might not include any upward adjustments to tax rates.
According to Mbadi, the government acknowledges the financial strain on Kenyans and has reached a point where further taxation, particularly on employment income, is no longer viable.
“We are not increasing VAT at all actually, the finance bill this year may not have any tax adjustment upward in terms of rates, we cannot overtax Kenyans anymore we have reached a limit where we are saying no more space for taxation on employment income,” Mbadi said.
