The Tax Guillotine Of 2025 That This Bread-Based Government Is Proposing Must Be Rejected Loudly
KEY POINTS
Raising VAT to 18% while removing exemptions on basic goods such as milk, bread, and ugali will further crush low-income households. A majority of Kenyans spend up to 50% of their income on food. Increasing VAT means fewer meals on the table and more children going to bed hungry.
Kenyans are no strangers to oppressive taxation. For years, the government has dug deeper into the pockets of its citizens, imposing tax after tax under the guise of funding development projects. Yet, these funds often vanish into the abyss of corruption, leaving the nation’s roads, hospitals, and schools in a perpetual state of decay. The Finance Bill 2025, however, marks an alarming escalation—an all-out assault on the livelihoods of millions. If passed, this bill will push Kenya’s struggling economy to the brink, deepen poverty, and stifle any hope of recovery.
Imagine a young family in Nakuru. They’ve just welcomed their first child, only to be slapped with a neonatal tax. While trying to secure diapers, food, and healthcare for their newborn, they must also contend with rising costs from an 18% VAT, higher PAYE rates, and a fuel levy that inflates the price of everything they consume. The dream of raising a healthy child morphs into a nightmare of financial strain. This isn’t fiction—it’s the grim reality awaiting countless families if the Finance Bill 2025 becomes law.
The proposed tax on diaspora remittances is equally devastating. Diaspora inflows were estimated at Ksh 498 billion in 2024, forming a critical lifeline for families and small businesses. Taxing these funds, which are already subject to charges abroad, will reduce their impact on local economies. Families relying on these remittances for education, medical care, and daily survival will feel the pinch. Countries like India, which boasts one of the largest diaspora populations globally, incentivize remittances rather than penalizing them, recognizing their value in bolstering domestic economies. Kenya’s approach is both counterproductive and cruel.
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Raising VAT to 18% while removing exemptions on basic goods such as milk, bread, and ugali will further crush low-income households. A majority of Kenyans spend up to 50% of their income on food. Increasing VAT means fewer meals on the table and more children going to bed hungry. Data from the Kenya National Bureau of Statistics (KNBS) shows that food inflation hit 10.8% in December 2024. These proposals will only worsen this trend, increasing food insecurity in a country where millions already face hunger.
The fuel levy hike is another dagger aimed at the heart of the economy. Fuel prices in Kenya are among the highest in East Africa due to existing levies. Adding Ksh 10 per liter will drive up transportation costs, inflating the price of goods across the board. Small traders, matatu operators, and boda boda riders will bear the brunt, passing these costs onto consumers. This vicious cycle will stifle economic activity, slowing down growth in key sectors like agriculture, transport, and trade.
The 1% mobile money levy proposed in the bill may appear small, but its impact is profound. Mobile money is the backbone of Kenya’s economy, facilitating transactions worth over Ksh 7 trillion in 2024. Taxing every payment, from school fees to medical bills, will hurt the poorest most, as they rely heavily on mobile money for daily transactions. Safaricom’s M-Pesa and similar platforms may see reduced usage as Kenyans return to cash, reversing gains in financial inclusion and innovation.
Farmers, already struggling with high input costs and erratic weather patterns, face a 5% tax on agricultural produce. Kenya’s smallholder farmers, who account for 70% of food production, will find it harder to stay afloat. Tea, coffee, and avocado exports—key foreign exchange earners—will lose competitiveness in global markets, as farmers pass higher costs to exporters. In contrast, countries like Rwanda offer tax breaks and subsidies to farmers, understanding their pivotal role in food security and export growth.
Even landowners aren’t spared. The idle land tax, set at 10% of land value, punishes ownership without addressing systemic issues like land fragmentation and underutilization. Urban and rural landowners alike will struggle to pay this levy, leading to forced sales and land grabbing by the politically connected. The government’s approach ignores the need for agricultural productivity and land development incentives, instead treating land ownership as a taxable offense.