National Treasury and Planning Cabinet Secretary John Mbadi defended the government’s tax policies, arguing that claims of over-taxation are misleading.
During the National Assembly Mid-Term Retreat in Naivasha, Mbadi emphasized that the current tax system is less burdensome than critics suggest, particularly for middle-income earners.
In a detailed presentation to MPs about the state of the economy, CS Mbadi broke down the tax implications for individuals earning Ksh 60,000 per month—a salary bracket often associated with Kenya’s middle class. He clarified that the introduction of the Housing Levy and the Social Health Insurance Fund (SHA) has been misrepresented as excessive taxation.
Mbadi explained, “If you earn Ksh 60,000, the additional deductions include the Housing Levy at 1.5% and SHA at 2.75%. Together, this totals 4.25%, or Ksh 2,550.”
The CS emphasized that even without these new deductions, individuals would still be subject to a 30% tax rate. With the recent amendments, this rate remains unchanged. After factoring in the removal of previous National Hospital Insurance Fund (NHIF) contributions, the net increase amounts to only Ksh 1,785.
To illustrate his point, Mbadi compared the new structure to the old NHIF rates. “Under the old system, someone earning Ksh 60,000 paid Ksh 1,700 monthly. Subtracting this from Ksh 1,785 means the actual additional deduction is just Ksh 85. Is that truly over-taxation?” he questioned.
Mbadi insisted that the narrative of over-taxation has been exaggerated and urged Kenyans to assess 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,” he concluded.
