In a strategic move to prevent further public unrest, Kenya’s government has proposed a 2025/26 budget that avoids introducing new taxes or increasing existing ones. This decision comes in the wake of last year’s deadly protests against tax hikes, which resulted in over 50 deaths and significant public outcry.
Background
In June 2024, youth-led demonstrations erupted across the country in response to proposed tax increases amounting to 346 billion shillings (approximately $2.68 billion). The protests led to violent clashes with security forces, prompting President William Ruto to abandon the tax hikes and delay funding from the International Monetary Fund (IMF).
The 2025/26 Budget Proposal
Finance Minister John Mbadi announced that the focus of this year’s finance bill is on improving tax administration and closing loopholes to enhance collection efficiency, rather than adjusting tax rates. The bill, now submitted to parliament, aims to raise an additional 25-30 billion shillings and includes spending proposals totaling approximately 4 trillion shillings, with a planned budget deficit of 4.5% of GDP.
A controversial proposal in the bill would grant the tax authority access to financial data of individuals and businesses to combat tax evasion. While critics have raised privacy concerns, Mbadi defended the move, arguing that many wealthy individuals evade taxes by exploiting legal protections.
Public Reaction
The government’s decision to avoid new taxes has been met with cautious optimism from the public. However, some civil society groups have expressed concerns over the proposed data access measures, urging for safeguards to protect citizens’ privacy.
Looking Ahead
As the budget proposal moves through parliament, all eyes will be on lawmakers to see how they balance the need for increased revenue with the imperative to maintain public trust and avoid further unrest.
Sources: Reuters