On the afternoon of June 2024, protesters breached the walls of Parliament, stormed its chambers, and forced legislators to flee. The demonstrations left 65 people dead, and a section of Parliament itself was set ablaze, prompting President Ruto to veto a Bill he had championed.
It was the most visceral expression of public fury Kenya’s democratic era had produced, and it was triggered, at least proximately, by a Finance Bill.
Two years on, a new Finance Bill sits before the same Parliament. The government has been careful to present it as a measured, targeted package; narrower in ambition, lighter on the blunt tax increases that detonated the 2024 crisis.
Unlike the Finance Bill 2024, which was withdrawn after significant public opposition, the Finance Bill 2026 includes fewer tax increase proposals, which may partly reflect the government’s intention to ease public concerns about high taxation ahead of next year’s general elections.
However, the public mood, already shaped by two years of protest, economic hardship, and a cost-of-living crisis that has not eased meaningfully, is not inclined toward charitable reading.
What began as scattered online conversations about the 2026 bill has evolved into one of the most visible youth-led digital civic movements since the Finance Bill 2024 protests, amid growing concern that the proposals target a generation already grappling with unemployment, high living costs and economic uncertainty.
The question is not simply whether the Finance Bill 2026 is better or worse than its 2024 predecessor. The question is whether it is good enough, and whether Parliament dares to make it so.
Phone Tax: Simplification or Sleight of Hand?
The proposal generating the most heat is a 25 per cent excise duty on mobile phones. A 25 per cent excise duty on mobile phones is among the key proposals in Kenya’s Finance Bill 2026.
Unlike the eco-levy proposed in 2024, which, following protests, was narrowed to apply only to imported devices, the 2026 excise duty applies to every phone, regardless of origin.
This means that locally assembled handsets, which the 2024 protesters fought to protect, are also subject to this provision.
Treasury CS John Mbadi has mounted a robust public defence. He explains that mobile phones are currently subject to multiple domestic taxes and levies during importation and along the supply chain: 16 per cent VAT, 10 per cent excise duty, 25 per cent import duty, a 2.5 per cent import declaration fee, and a 2 per cent railway development levy, amounting to a cumulative tax burden of approximately 55.5 per cent.
The proposal, he has argued, seeks to simplify the taxation framework to a single 25 per cent excise duty collected upon activation of the phone.
“All that is 55.5 per cent, and when you put your phones in the stores, your liquidity is constrained. Now we do not want to tax any phone until it is sold, then you pay one tax, an excise duty of 25 per cent. That to me is the way to simplify tax,” he said during a public address at Jevanjee Gardens.
Critics are not convinced. The Treasury’s arithmetic makes sense on paper only if all five existing taxes are simultaneously abolished, a condition that remains legally uncertain.
The adjustment to the Common External Tariff, a shared East African Community instrument that currently sets import duty on phones at 25 per cent, is a separate matter outside Parliament’s unilateral jurisdiction.
Analysts have argued that while the Finance Bill touches on these taxes, customs is an EAC affair, and at this point, Kenyans have not had visibility. If the EAC rate remains in place while the new excise duty kicks in, consumers face the worst of both worlds: a reformed tax layer added to an unreformed underlying one.
The government has not published a consumer impact assessment for the provision, nor stated the projected revenue to be raised, an omission that, given the political sensitivity of the proposal, is difficult to explain and harder to justify.
Taxing the Infrastructure of Inclusion
The second major flashpoint is the proposed removal of VAT exemptions on digital financial services.
The Bill proposes to exclude “money transfers, payment processing, settlement, merchants acquiring, gateway or aggregation services” supplied over software or platform by a Payment Service Provider from the VAT exemption list.
This change would result in banks and PSPs charging 16 per cent VAT on merchant fees and other transactions, with the cost inevitably passed on to consumers.
The Kenya Bankers Association (KBA) has been unequivocal in warning that the compounding tax burden would inflate total digital financial transaction costs from 15 per cent to 58.4 per cent.
The Association of Microfinance Institutions (AMFI) has gone further, arguing that taxing payment services would amount to “taxing capital flow rather than final consumption.”
Treasury’s position on this front is more nuanced. CS Mbadi has sought to clarify that the proposed withholding tax on card transaction-related fees would be levied at 0.01 per cent, described as largely a visibility and compliance mechanism for resident entities, while serving as a final tax for offshore firms.
He has also sought to calm concerns surrounding mobile money platforms, stating that companies such as Safaricom and Airtel Money were not the intended targets of the proposed changes, because they both own and operate their payment platforms directly.
The Treasury argues that foreign firms earning revenue from Kenya’s payments ecosystem should contribute to the country’s tax base, particularly because they benefit from domestic infrastructure and financial networks.
It is a principled argument. But it sits in uneasy tension with the Bill’s text, which critics say is broad enough to sweep in domestic operators alongside foreign ones, a drafting ambiguity that Parliament must resolve before the Bill advances.
A Weapon Against Avoidance, or Against Investment?
The most technically complex and potentially most consequential provision in the Finance Bill 2026 may be the least discussed in the public sphere.
The proposed law introduces a tough new regime that could see companies slapped with tax assessments equal to 60 per cent of undeclared dividends, marking one of the most aggressive anti- tax-avoidance measures in recent years.
KRA would gain authority to treat certain unexplained payments, benefits, transfers or withdrawals made to shareholders and directors as deemed dividends, even where no formal declaration has been made.
The origins of this provision are traceable to a specific dispute: a row between KRA and property and investment firm Githima Limited, in which the taxman demanded KSh 3.7 million in income tax after an assessment covering 2017 to 2019.
The firm won the suit after proving that the dividend retention was necessary. The Bill, in effect, tips the legal scales back toward the taxman, and then some.
KBA warns that forcing financial institutions to deem 60 per cent of retained earnings as dividends is an unreasonably high threshold that threatens core stability. Businesses retain earnings to reinvest in growth, expand access to credit, and shield themselves from market volatilities.
Among the most pointed critiques: where is the room for reinvesting profits to boost wealth accumulation, increase shares, and drive compounded long-term investment and growth?
The government’s counterargument that this measure targets deliberate tax avoidance, not legitimate business reinvestment, is reasonable in principle.
But the 60 per cent threshold has no clear evidential basis, and Bowmans law firm warned that some of the measures introduce uncertainty and potential double taxation, which could undermine Kenya’s attractiveness as an investment destination.
The Bill fails to address the deeper question haunting Kenya’s economy: increased taxation with little to no accountability.
What Has Been Conceded
To its credit, the Treasury has not been entirely deaf to the public participation process.
The National Treasury withdrew a number of proposals following public backlash and stakeholder consultations, including a hike in residential rental income tax from 7.5 per cent to 10 per cent, after concerns it would push landlords to increase rent for tenants already struggling with high living costs.
Also dropped was the planned presumptive income tax on mitumba imports, which traders warned would significantly raise clothing prices.
These withdrawals matter, both substantively and symbolically. They suggest a government that, at some level, is reading the room.
But they also illustrate a deeper structural problem. The 2026 reversal is symptomatic of a government that announces rates, re-optimises under fiscal pressure, and thereby erodes the predictability that taxpayers need to plan.
Behind every specific clause lies a number that contextualises the entire bill. Kenya’s total public debt stands at an estimated Sh13.02 trillion. In FY2024/25, the government spent Sh 1.72 trillion servicing debt, equivalent to approximately 69 per cent of ordinary revenue collected.
The revenue imperative is real, urgent, and not easily wished away. But revenue collection and public legitimacy are not the same thing, and a government that confuses one for the other governs at its peril.
The Bill initially backtracked on earlier promises to offer tax relief for lower-income earners, but President Ruto has since declared that those earning less than Sh30,000 will no longer pay income tax.
The 2024 protests were driven by a disgruntled youth population reeling from a heavy tax burden, corruption, economic hardship, a shrinking employment space, and exclusion from the governance and political spheres. None of those underlying conditions has been resolved.
What has changed is the political stakes: 2027 is a general election year, and every MP voting on this Bill knows that the constituency watching them most closely is one that has already, once, walked through Parliament’s gates.
The Finance Bill 2026 is not the Finance Bill 2024. It is more careful, more targeted, and more responsive to the political lessons of the past two years. Whether that is enough, whether it is genuinely good policy or merely good politics dressed up as moderation, is precisely the question Parliament must answer in the days ahead.
