As the Kenyan government tables the Finance Bill 2025 with assurances of no new taxes, a significant portion of the populace remains focused on the financial bite of levies introduced in the preceding year. The assertion that the new bill avoids fresh tax burdens offers little solace to employees whose payslips have already been significantly impacted by the Affordable Housing Levy and increased contributions to the revamped Social Health Authority (SHA).
The government, led by the President and the Treasury, has emphasized that the Finance Bill 2025 prioritizes economic recovery through efficient tax administration and sealing revenue loopholes, rather than imposing new direct taxes on citizens. This stance appears to be a response to the widespread public outcry and protests that met the Finance Bill 2024, which was perceived as overburdening a populace already grappling with a high cost of living. Finance Minister John Mbadi has been quoted stating the bill is “more on tax administration and trying to seal the loopholes and also make tax collection efficient,” and that it targets only a modest increase in revenue through these efficiencies.
However, for many Kenyans, the financial landscape has already been altered. The Affordable Housing Act, 2024, which came into effect in March 2024 after navigating legal challenges, mandates a 1.5% deduction from employees’ gross salaries for the Housing Levy, with employers contributing a matching 1.5%. This levy, collected by the Kenya Revenue Authority (KRA), is intended to fund the government’s ambitious affordable housing agenda. While the employer’s contribution is an allowable deduction under the Income Tax Act and employees get a corresponding relief, the direct impact on net pay has been palpable.
Adding to this is the introduction of the Social Health Insurance Fund (SHIF), which replaced the National Health Insurance Fund (NHIF). Effective October 2024, employees began contributing 2.75% of their gross pay to SHIF. While the government did amend the Income Tax Act in late December 2024 to make both Housing Levy and SHIF contributions allowable deductions—thereby reducing the taxable income—the cumulative effect of these, alongside phased increases in National Social Security Fund (NSSF) contributions that began in February 2025, has left many employees with significantly less disposable income.
Financial analysts and employee representatives have pointed to the strain these deductions are placing on households. Reports from late 2024 and early 2025 highlighted concerns that for some employees, total statutory deductions could approach or even exceed the legal limit of two-thirds of their salary, as stipulated by the Employment Act. This reduction in take-home pay is not just an abstract economic indicator; it translates to tougher choices for families managing daily expenses, savings, and investments.
Public sentiment, as echoed in numerous forums and media commentaries, reflects a weariness with these levies. The common refrain, “We do not want the housing levy,” underscores a feeling that despite the government’s intentions, the immediate financial burden is a pressing concern. The controversy was further fueled by a statement from Lands, Public Works, Housing and Urban Development Cabinet Secretary Alice Wahome, who clarified that contributing to the housing levy is a tax and does not guarantee home ownership under the Boma Yangu programme, a statement that many found disheartening. The Federation of Kenya Employers (FKE) has even appealed to the government to reduce the housing levy rate to 0.5%, citing the financial strain on workers.
While the Finance Bill 2025 itself might not introduce “new” taxes in the traditional sense, some financial experts caution that a deeper analysis of its provisions is necessary. Proposals within the bill, such as those potentially granting the KRA greater access to personal financial data for tax compliance, are being scrutinized for their potential impact, even if they are framed as administrative changes. On a more positive note for some, the bill reportedly proposes tax exemptions for pensioners and a shift in housing strategy to offer salary relief for mortgage takers, though the efficacy of the latter would depend on prevailing interest rates.
As the Finance Bill 2025 undergoes public participation and parliamentary debate, the overarching message from many Kenyans is clear: the impact of existing levies is still a raw nerve. The government’s commitment to “no new taxes” will be judged not just by the letter of the new bill, but by its willingness to address the cumulative financial pressure already being shouldered by its citizens. Genuine engagement with public feedback and a demonstrable effort to alleviate this burden will be crucial in rebuilding trust and ensuring that economic policies are not only fiscally sound but also socially sustainable.
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