While citizens eagerly anticipated PAYE relief from the government, its absence in the Finance Bill 2026 has shaken confidence and increased economic strain on families.
This expectation stemmed from promises made by National Treasury Cabinet Secretary John Mbadi and further emphasized by President William Ruto. For many Kenyans, this was more than talk; it represented a commitment. Easing PAYE would not only honor the government’s pledge but also enhance disposable income, stimulate household spending, and drive economic growth.
Opponents of this proposal often raise concerns about funding the revenue gap. However, we can address any shortfall through progressive taxation targeting wealth and high-value assets, creating a fairer system for all Kenyans.
Parliament must fulfill the government’s promise to lighten the tax burden on low- and middle-income earners by introducing meaningful PAYE relief in the Bill. This is the right choice.
Instead of tightening fiscal constraints on low-income earners, Parliament should consider a progressive wealth tax. Evidence suggests that a well-structured wealth tax could generate around Sh130 billion annually, transforming public financing and tackling economic inequality directly.
The case for restructuring our tax system is compelling. Kenya’s revenue relies heavily on regressive consumption taxes, which constitute 56.2% of total tax revenue. This model unfairly burdens the poorest households while allowing the wealthy to minimize their tax contributions.
The World Inequality Database reveals that the top 10% of Kenyans control about 63% of national wealth, while the bottom 50% survive on just 4%. Kenya has approximately 7,200 dollar-millionaires and 16 centi-millionaires, yet we lack a fair framework to ensure the ultra-rich contribute their share. This is a crucial discussion for Parliament.
Lawmakers should mandate a phased approach, directing the National Treasury and the Kenya Revenue Authority to establish three foundational pillars before implementing a net wealth tax.
First, the KRA should introduce structured voluntary disclosure programs for high-net-worth individuals, offering limited amnesty and reduced penalties for early self-declaration. This approach can foster compliance and build trust.
Second, Parliament must legislate the creation of a central wealth database within the Business Registration Services. Current asset information is scattered across various registries, hindering real-time verification. A unified platform tracking equities and properties is essential, respecting privacy as outlined in the Data Protection Act, 2019.
Third, Kenya should enhance international transparency by aligning with the OECD’s Common Reporting Standard. Addressing cross-border transfers is crucial to prevent tax evasion and wealth flight.
While these multi-year structures are established, Parliament can take immediate steps within the Finance Bill 2026. Lawmakers should harmonize capital gains tax rates, currently at a low 15%, with the corporate income tax rate of 30%.
This adjustment can be made right away, ensuring that wealth-related returns are not favored over hard-earned salaries. Parliament should remember that hardworking citizens are watching.
