As Parliament continues to scrutinise the Finance Bill 2026, debate has shifted from broad concerns about new taxes to a handful of specific proposals that could affect millions of Kenyans, businesses and investors.
The Bill, which the National Treasury says is aimed at broadening the tax base and improving compliance rather than introducing sweeping tax increases, has nevertheless sparked intense public discussion. From changes affecting salaried workers and smartphone users to concerns around mobile money transactions, mitumba trade and data privacy, several proposals have emerged as key talking points.
1. PAYE Reduction
One of the most widely welcomed proposals in the Finance Bill is the plan to ease the tax burden on lower-income employees.
Treasury officials have argued that the reforms are intended to leave more disposable income in the hands of workers while supporting consumer spending and economic growth. The proposal has been cited as one of the government’s attempts to cushion households amid a high cost of living and slowing wage growth.
For many salaried Kenyans, the PAYE changes represent one of the few direct benefits contained in the Bill, helping explain why the issue has attracted significant public interest.
2. The Smartphone Tax Debate
Perhaps no proposal has generated as much public reaction as the planned 25 per cent excise duty on smartphones and communication devices.
Critics argue the measure could make smartphones more expensive at a time when digital access is increasingly essential for education, business and financial services. Small traders and digital entrepreneurs have also expressed concern that higher device costs could slow digital inclusion.
However, Treasury Cabinet Secretary John Mbadi has defended the proposal, arguing that it is not an additional tax but a consolidation of multiple existing charges. According to the Treasury, imported phones currently attract a combination of VAT, customs duty, the Railway Development Levy and the Import Declaration Fee, which collectively amount to roughly 55 per cent. The proposed 25 per cent excise duty is intended to replace these charges with a simpler tax structure.
Whether consumers will ultimately pay less remains one of the biggest questions surrounding the proposal.
3. M-PESA and Digital Payments
Mobile money users have been closely watching the Bill amid fears that transaction costs could rise.
Concerns intensified after reports suggested that changes affecting digital financial services could result in higher charges on mobile money and electronic transactions. Some analysts have also pointed to proposals affecting VAT treatment of digital payment services and other financial technology platforms.
However, the Treasury has sought to calm fears. CS Mbadi recently stated that the government is not introducing new charges on M-PESA transfers and that the focus is instead on taxing foreign-owned digital service providers that generate income from Kenya without paying sufficient local taxes.
Despite those assurances, the issue remains a major point of discussion because of Kenya’s heavy reliance on mobile money for everyday transactions.
4. Mitumba Sector Concerns
The second-hand clothing industry, which supports thousands of traders and millions of consumers, has become another flashpoint in the Finance Bill debate.
Initial proposals linked to imported mitumba products triggered concern among traders, who warned that additional taxation could increase prices and threaten livelihoods. Following public backlash, Treasury indicated that a controversial proposal targeting the sector had been dropped, although discussions on future taxation models continue.
At the same time, trader associations have proposed a five per cent presumptive tax collected at importation as a simpler and more predictable system. They argue that such a framework would improve compliance without disrupting the industry.
The debate underscores the importance of the mitumba value chain, which remains a major employer and a key source of affordable clothing for low-income households.
5. VAT Changes, Pension Rules and Data Privacy Concerns
Another area attracting significant attention is the Bill’s treatment of VAT exemptions, pension-related provisions and tax compliance measures.
Tax experts have noted that the Finance Bill proposes various amendments affecting VAT treatment across different sectors, alongside changes intended to strengthen tax administration and widen the tax base.
At the same time, concerns around taxpayer privacy have resurfaced. Debate continues over the extent to which the Kenya Revenue Authority should access financial information in its efforts to improve compliance and combat tax evasion. Similar proposals in previous finance legislation attracted strong opposition from lawmakers and civil society groups, who argued that unrestricted access to personal financial data could violate constitutional privacy protections.
For pension contributors and investors, there is also growing interest in how the proposed reforms could affect long-term savings, retirement planning and investment decisions, making this one of the most closely watched sections of the Bill.
What Happens Next?
The Finance Bill 2026 is currently undergoing parliamentary scrutiny and public participation, meaning some proposals could still be amended before final approval.
What is already clear, however, is that discussions around PAYE relief, smartphone taxation, digital payments, the mitumba industry and privacy-related tax measures are shaping the national conversation. How Parliament resolves these issues could determine not only government revenue collection but also the cost of living and ease of doing business in the coming financial year.
Read:Â Finance Bill 2026: What It Has Introduced, new taxes
>>>Â Finance Bill 2026 Published as Treasury Unveils New Tax Proposals
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