Private sector urges review of Finance Bill 2026 over tax burden concerns

Added: 2026-05-25

[00:00:00]Now, the private sector is now pushing Parliament to rethink parts of the Finance Bill 2026, warning that higher taxes and rising business costs could slow investment, hurt job creation, and weaken already strained consumers.

[00:00:12]Business lobby groups led by the Kenya Private Sector Alliance say that the focus should shift from increasing taxes to policies that grow the economy and consequently widen the tax base. Jasmine Wambui has the details.

[00:00:24]Business lobby groups led by the Kenya Private Sector Alliance are warning that businesses and consumers will be squeezed hard if proposals in the Finance Bill 2026 are passed without changes.

[00:00:38]True revenue growth is a byproduct of an expanding economic base, not intensifying tax rates on a shrinking pool of formal taxpayers. They warn that rising production costs, multiple taxes, and frequent policy changes are undermining competitiveness.

[00:00:58]We must align our tax regime with East African Community, the common external tariff bands, to prevent capital flight, and insulate local supply chains from regional rivals like Ethiopia and Rwanda. Among the proposals submitted to Parliament is the reduction on the maximum pay as you earn rate from 35% to 30% alongside an increase in monthly personal relief to 3,000 shillings. The private sector says the changes would inject an additional 28.1 billion shillings into the economy by increasing disposable income, supporting household spending, and stimulating economic activity. Salaried workers, salaried Kenyans, have faced severe erosion of purchasing power, highlighted by 10.7% to 12% decline in real wages due to inflation and cumulative tax adjustments like the Affordable Housing Levy 1.5% and SHIF, which is 2.75%.

[00:01:58]They are also opposing the proposed 16% VAT on digital payment processing and withholding tax on CAD network interchange fees. This they say would increase transaction costs and push small traders back to cash payments.

[00:02:14]Retail traders are further cautioning against rising compliance requirements saying the burden could ultimately be passed on to consumers through higher prices. Uh compliance has become a full-time issue. It should not be a full-time department.

[00:02:30]Uh there should be clarity, transparency so that even as I'm opening a business, I know exactly what am I supposed to comply to. I can do it in a day or two and then get into the business of doing business.

[00:02:44]The private sector after submitting its proposals on the finance bill earlier today is now urging the government to take seriously its recommendations arguing that if the experience of the last two years is anything to go by, policies that ignore business concerns could further strain job creation, investment, and economic growth.

[00:03:06]Jasmine Wambui, Citizen TV, Nairobi.