Mbadi vows return of tax on second-hand clothes

Added: 2026-05-12

[00:00:00]Now, the National Treasury Cabinet Secretary John Mbadi has vowed to reintroduce taxation on second-hand clothing after it was removed from Finance Bill 2026 by the National Assembly. Mbadi who sought to clarify key provisions of the Finance Bill 2026, noted that some aspects of the bill have been taken out of context with an aim to mislead the public. Mbadi noting that there are no new taxes on mobile phones or bottled water, adding that the proposals to tax second-hand clothes came from the sector players who wanted the process simplified. Jimmy Bogo has more.

[00:00:34]In a move that could see the 2026 Finance Bill face pushback, the National Treasury is set to reintroduce by way of an amendment the proposed taxes on second-hand clothes, popularly known as mitumba. According to Treasury CS John Mbadi, the amendments are aimed at simplifying taxes for the mitumba sector, where they will only pay taxes at the point of entry. Mbadi says this came as a request from the sector, which agrees that for income tax, 5% of custom value will be deemed as profits, which will then be taxed at 30% to give a 1.5%, which will be the final tax. And as a government that listens to public participation, to Kenyans, we believed that that was the right way to go. And that is the proposal that we took to the National Assembly, but unfortunately, it has been dropped. But I still want to insist that that particular provision we will recommend to Parliament to bring it back as an amendment because it is addressing an industry problem.

[00:01:37]The Treasury Cabinet Secretary also justifying some of the provisions in the 2026 Finance Bill, which he says have been miscommunicated, while also explaining why certain concessions could not be made in the current financial year. According to Mbadi, although the government is open to a pay-as-you-earn pay reduction, this could mean an increase in budget deficit, arguing that the move could punch a 35 billion shillings hole in the budget based on the current simulations that were aimed at zero-rating earnings of up to 30,000 shillings from the current 24,000 shillings. He however assured the public that if reforms at the Kenya Revenue Authority bear fruits and the government collects more from personal income tax, Treasury would reconsider. From 38,800 to 50 to above 50,000, you pay at 30%.

[00:02:27]So, that's a reduction of 5%. From 24 to 30,000 is also a reduction to zero. Now, all that compounded gives a budget hole.

[00:02:41]Meaning, we are going to collect less by 35 billion shillings. That is the assessment that my team has worked on.

[00:02:48]So, we are looking at if that is the case, where do we get revenue to compensate for this? But, he has further defended the move to empower the Kenya Revenue Authority to prepopulate the tax liabilities based on income information from other sources. A move that could render self-assessment redundant should the bill become law. Treasury argues that reliance on self-assessment is not enough. This is however contrary to tax experts' warning that such provisions could expose Kenyans to aggressive tax collection measures while opening room for abuse. Tax is not a private affair.

[00:03:24]In the sense that where you have earned income, then you should pay the taxes that follow. So, it means if you have an issue, a concern with the assessment that has come to you, it is open and the law you actually prescribes that that you can challenge it. The problem with this amendment which has been fought over the years are these people we call we call money launders.

[00:03:49]They are the ones who are fighting this thing.

[00:03:52]Because they cannot justify their income.

[00:03:56]And let me appeal to the media. Please don't support these people.

[00:04:02]Many people who should pay less taxes in this country are paying less taxes because people who are supposed to pay taxes are interfering with the legal framework that should force them to pay taxes.

[00:04:17]Uh the CS now says that the proposal to allow the Kenya Revenue Authority to issue agency notice during an ongoing dispute is aimed at ensuring that the government collects revenue without being derailed by an ongoing case, a move he says is meant to address the abuse of the court process. So, there should be a very good ground for giving an order. And that is what we expect our judiciary to determine.

[00:04:42]And if they determine that they realize, "No, you are not supposed to pay until the case is concluded." Let it be in black and white. And no one will come to you to pay the tax. But in the absence of that, honestly, it is not fair. It is not fair to the to KRA and it is not fair to the country. Uh the Cabinet Secretary for the National Treasury, John Badi, has sought to clarify that the 2026 Finance Bill is not aimed at increasing the tax rate in the country, but rather to offer clarity in taxation in the next financial year.

[00:05:15]Jimmy Mbogo, Citizen TV, Nairobi.