The middle class in Kenya has long carried the nation’s economic ambitions on its shoulders—faithfully paying taxes, fuelling domestic consumption, employing household workers, and building small businesses that create jobs and opportunities. Yet today, this crucial segment of society is under siege. A wave of aggressive tax measures, shifting regulatory frameworks, and mounting statutory deductions is steadily choking the very engine of national development.
Recent changes in how used car imports are taxed are a case in point. The Kenya Revenue Authority (KRA) has scrapped the long-standing Current Retail Selling Price (CRSP) valuation system, replacing it with an invoice-based taxation model. While the shift is presented as a move towards transparency and alignment with global norms, the real impact will be felt in the pockets of ordinary Kenyans.
The costs of importing popular vehicle models—such as the Toyota Vitz, Mazda Demio, and Suzuki Swift— will surge dramatically. These models, once accessible to modest income earners, will be significantly more expensive, with estimates showing tax increases of up to KSh 330,000 per vehicle. For many aspiring car owners, the dream of owning a reliable, affordable car has suddenly moved out of reach.
This is not just a personal inconvenience; it has far-reaching implications for sectors that rely heavily on affordable vehicles. Kenya’s digital taxi-hailing industry is already bearing the brunt of previous tax changes on VAT. Ride-hailing services such as Uber and Bolt have provided thousands of young Kenyans with livelihoods and helped transform urban mobility. But now, that progress is at risk.
Platform drivers are finding it increasingly difficult to stay afloat. A 25-kilometre trip that earns the platform KSh 1,000 translates into a meagre KSh 569 for the driver, once platform fees, fuel, and maintenance costs are factored in. Spare parts are more expensive than ever before, partly due to an additional 20 percent excise duty on accessories. With higher upfront costs and growing overheads, many drivers are simply walking away from the industry. Others have begun to sidestep app-based pricing altogether, choosing to negotiate fares directly with passengers as a survival tactic.
For taxi-hailing companies, profitability in the Kenyan market is becoming increasingly elusive. Additional digital levies and increased regulatory pressure have prompted some firms to warn of scaled-down operations or outright exits. Should this happen, urban transport will be severely disrupted, and yet another income avenue for Kenyan youth will disappear.
Meanwhile, for the salaried worker, statutory deductions continue to eat away at take-home pay. Contributions to the housing fund, national health insurance, and social security schemes have all increased over time. While these deductions serve essential national goals, the rate of increase and the lack of corresponding growth in wages have pushed many into a financial corner. For some, nearly half of their gross salary is now lost to mandatory contributions before they even receive it.
The broader effect is an erosion of disposable income, a decline in consumer spending, and a slowdown in small-scale investment. For the average middle-class household, the cost of living has risen sharply, with fewer options to cope or adjust. Families are tightening budgets, shelving investment plans, and dipping into savings just to make ends meet.
This sustained economic squeeze raises serious concerns about the direction of public policy. Is the government creating conditions for upward mobility, or is it inadvertently undermining the very people expected to power economic growth? Taxation is essential, yes—but when it becomes excessive, unpredictable, or poorly aligned with citizens’ ability to pay, it shifts from being a civic duty to a form of economic punishment.
Kenya’s middle class is not asking for handouts. It is simply asking for a fair deal—a policy environment that recognises its contributions and supports its continued growth. That means listening to citizens, consulting industry players, and crafting taxation measures that promote productivity rather than suffocate it.
The Kenya Revenue Authority and other agencies involved in fiscal planning must consider the wider economic and social implications of their policies. A tax regime that pushes cars out of reach, makes business unviable, and leaves workers demoralised cannot yield sustainable revenue in the long term.
Kenya’s economic future depends on the vitality of its middle class. Undermining that class is not just short-sighted—it is dangerous. Let us remember that economic development thrives not on extraction, but on empowerment.
