Tax Laws Amendment Bill seeks to return spending power to Kenyans

Majority Leader Kimani Ichung’wah, during the debate, emphasized the bill's potential to ease financial pressures on ordinary citizens and enhance tax equity.

“This bill is about putting back money into people’s pockets,” Ichung’wah stated. “It’s a progressive bill that aligns our tax policies with equity and fairness, ensuring that everyone earning an income contributes to our tax revenues, so we don’t overburden a few people while raising revenue for the country.”

Insights from the Finance Committee’s nationwide public participation exercise heavily informed the bill's proposals. Ichung’wah noted that Kenyans, particularly business owners, voiced frustrations about being overtaxed and sought relief.

“When the Finance Committee traversed this country, people told them they are crying because they are overtaxed. But they also said they want money back in their pockets,” he revealed.

“This bill responds directly to those cries by proposing measures that benefit both individuals and businesses.”

To make Kenya’s tourism sector more competitive, the bill removes VAT on park fees. This move addresses concerns about Kenya pricing itself out of the regional market, particularly in comparison to Tanzania’s Serengeti.

“The lion in the Maasai Mara is the same lion in the Serengeti,” Ichung’wah remarked. “If you levy VAT on park fees in the Mara, tourists will move to the Serengeti across the river Mara. We can’t discourage tourism to our parks when they’re the best destinations in the world.”

A major provision of the bill is the exemption of gratuity payments from taxation. Currently, employees receiving gratuity at the end of their service are taxed on those funds despite having already paid taxes on the contributions while in active service.

“The committee is now proposing that Kenyans who earn gratuity at the end of their term be exempted from tax,” Hon. Ichung’wah explained. “It is not fair that after serving and paying taxes during their tenure, you still tax them on their gratuity.”

The bill also introduces tax-deductible contributions to the Housing Fund Levy and the Social Health Insurance Fund (SHIF). These deductions will offer significant relief to Kenyans, encouraging compliance and easing financial strain.

“For every contribution now made to the Housing Fund or SHIF, that deduction on your payslip will be tax-deductible,” Hon. Ichung’wah said. “This is yet another way we’re putting money back into people’s pockets.”

The Tax Laws (Amendment) Bill represents a critical step toward restoring public confidence in Kenya’s tax system. By addressing grievances raised during public participation and introducing tax reliefs, the bill is set to empower Kenyans economically while ensuring the government maintains a sustainable revenue base.

“This bill strikes a balance,” Hon. Ichung’wah concluded. “It is a win-win for taxpayers, who make savings, and for the government, which enhances compliance and revenue collection.”