Treasury Cabinet Secretary John Mbadi during the 2025 Budget reading at Parliament Buildings, Nairobi, on June 12, 2025. [Elvis Ogina, Standard]
In the Finance Bill 2025, now awaiting presidential assent, the National Treasury largely refrained from introducing new tax proposals. Seemingly chastened by last year’s public outcry, it appears to have taken heed of the protests led by young Kenyans—predominantly Gen Z—who condemned the punitive taxation measures contained in the Finance Bill 2024.
But perhaps the most significant lesson the Treasury has drawn is the value of fragmentation. Rather than front-loading all contentious measures into a single Finance Bill, it is now increasingly splitting them across separate amendments to various Acts—timed strategically throughout the year to avoid the intense scrutiny the Finance Bill typically attracts.
Nonetheless, despite last year’s public backlash and a heightened sense of vigilance among Kenyans, the Treasury has not completely steered clear of controversy. In this year’s Bill, it has proposed amendments to the Value Added Tax (VAT) Act that many fear will increase the cost of essential goods, including pharmaceuticals and agricultural inputs.
It has also sought to grant the Kenya Revenue Authority (KRA) sweeping access to personal data and business trade secrets—provisions strongly opposed by Kenyans and subsequently rejected by the National Assembly’s Finance and Planning Committee in its report to Parliament.
Comparing the Finance Bills of 2024 and 2025, Alex Kanyi, a partner at Cliffe Dekker Hofmeyr (CDH) Kenya, noted the stark difference in projected revenue. “In the Finance Bill 2025, the government expects to raise between Sh25 billion and Sh30 billion, compared to Sh340 billion projected from the Finance Bill 2024—which was ultimately withdrawn in the wake of the Gen Z protests,” said Kanyi.
“When you compare the two Bills, there is a huge reduction in terms of how much the government plans to collect. That tells you that the measures within the Finance Bill 2025 will not necessarily increase taxes,” he said.
He added, “The government clearly learned from the Gen Z protests. The modest revenue expectations reflect that shift.”
Kanyi also observed that Parliament’s Finance and Planning Committee has made greater efforts to engage with Kenyans—partly through the increased use of digital platforms.
Ken Gichinga, Chief Economist at Mentoria Economics, concurred. He noted that, in its attempt to avoid provoking public outrage, the government had shifted the tax burden away from households and towards businesses.
“Finance Bill 2025 focuses more on businesses than individuals,” Gichinga said. “Given the experience of last year, they’ve avoided proposals that would directly affect individual consumers. Most of the tax changes relate to issues such as VAT refunds for businesses.”
Reflecting on the roots of last year’s protests, Gichinga noted that while there were other factors including demand for good governance, increased taxes over the years as well as tough economic times have been pushing Kenyans against the wall.
Vigilant citizens
“The disquiet did not start with the Finance Bill 2024,” he said. “It had been simmering since the Finance Act 2023, which introduced the Housing Levy and doubled VAT on fuel. When the 2024 Bill proposed price hikes on basic goods like bread, what had been bubbling under finally erupted.”
The unrest coincided with a sluggish economy that was still recovering from the impact of Covid-19, elevated interest rates, and a prolonged drought.
“The 2024 Finance Bill was very aggressive in terms of revenue raising. It was coming at a time when interest rates were high, the economy was fairly sluggish and there was an urgent need to increase tax revenues to cover the widening fiscal deficit and that is why we saw aggressive revenue raising measures,” he said.
“It tried to tax items that were near and dear not just to Gen Zs but also all Kenyans… things that we all use on a daily basis.”
He noted that the citizenry, too, has evolved. They are no longer taking the budget as passed down to them by their leaders and are instead combing through the budget estimates as well as the Finance Bill and flagging what may not go down well with them.
“In 2023, opposition to the Finance Bill was largely traditional—led by lobbies, trade unions, and political parties,” said Gichinga. “But in 2024, the resistance was decentralised and digital, led by Gen Zs. What we saw on June 25 was an uncoordinated, but powerful eruption of civic engagement.”
“For the longest time, budgeting was seen as the exclusive domain of Parliament. Most Kenyans were neither aware of nor interested in the process. But now, with widespread access to technology and economic hardship biting harder, people are connecting fiscal policy to their everyday struggles.”
“More and more Gen Zs are becoming mainstream participants in civic life. They are informed, digitally savvy, and economically disillusioned.”
To allay public fears, the government has marketed the Finance Bill 2025 as a “no new taxes” document. Yet, analysts caution that it still contains several contentious clauses—many of which could drive up the cost of living.
Among these are proposals to reclassify certain goods from zero-rated to VAT-exempt status. Affected items include pharmaceutical manufacturing inputs, sugarcane transportation, motorcycles, electric bicycles, solar and lithium-ion batteries, electric buses, animal feed raw materials, and bioethanol vapour (BEV) stoves.
These provisions were among those rejected by the Finance and Planning Committee, which warned that the move would increase production costs and discourage investment. “We recommend reversing this decision and retaining their zero-rated status,” the committee stated in its report.
In an about-turn, Kimani Kuria—Chair of the Finance and Planning Committee and a key proponent of the now-withdrawn 2024 Bill—warned against using the Finance Bill solely as a revenue-generation tool.
“We must desist from treating the Finance Bill as merely a toll for raising revenue,” Kuria told Parliament. “It should also be a policy instrument. Our committee has stood its ground on several issues. Some of these exemptions were granted as recently as December—only for Treasury to seek their reversal five months later.”
Kuria cautioned that constant changes to tax policy create instability and undermine investor confidence, especially when businesses have already made plans based on previous exemptions.
Public scrutiny of the Finance Bill 2025 began almost immediately after it was tabled in Parliament in late April. Civil society and digital activists flagged various contentious clauses, leading to increased online mobilisation. The State’s response, however, was heavy-handed.
Among those targeted was Rose Njeri, a web developer who created a website enabling Kenyans to submit their views on the Bill. She was arrested, and her whereabouts were unknown for several days before she was finally brought to court and charged with unauthorised access to a computer system.
Yet Gichinga believes the civic momentum is unlikely to falter.
“Engagement levels will only increase. More Kenyans now understand that the budget-making process starts early in the financial year. They also see that sustained public pressure can lead to change,” he said.
Standalone amendments
The “no new taxes” narrative does not mean Kenyans are in the clear. Treasury is increasingly using alternative legislative avenues to implement fiscal policy—away from the spotlight trained on the Finance Bill.
Last year, some measures rejected in the 2024 Bill were reintroduced through piecemeal amendments to other laws, which passed quietly through Parliament and received presidential assent with little public outcry.
Gichinga noted that Treasury has become more tactical, introducing controversial clauses via standalone amendments rather than through the main Finance Bill.
“The Finance Bill was withdrawn on June 26 , 2024, but by December we had the Tax Laws Amendment Act 2024, the Business Laws Amendment Act, and the Tax Procedures Amendment Act—many of which revived proposals from the earlier Bill,” he said.
Kanyi observed that this approach is likely to continue.
“It’s a deliberate strategy. The government has realised it need not place all its eggs in one basket,” he said. “If the Finance Bill is rejected, everything goes down with it. But by distributing proposals across various amendments, it can achieve the same objectives with far less resistance.”
“We’re also seeing a shift towards levies,” he added. “This is the government thinking that if the ordinary Kenyan is not happy with an increase in VAT rates, or an increase in Pay-As-You-Earn rates, then it can try a levy.”
“The endgame seems to be maintaining fiscal targets through incremental legislative changes rather than a single, heavily scrutinised Bill.”