CSOs warn Finance Bill, 2025 will increase poverty

Alexander Riithi of the Institute of Social Accountability (TISA) said the feeding programme faces a reduction of Sh600 million despite the increase in the number of targeted learners, warning of school dropouts should the proposal go through.

"According to our calculations based on KIPPRA data, Sh600 million could provide one meal a day for 50,000 children for the entire financial year, meaning these children could potentially miss out on a meal this coming financial year," he said. 

The group also raised concern over suggested amendments to Value Added Tax which proposes to move several essential products including raw materials for pharmaceutical manufacturing, animal food production from zero rating to VAT Exempt. 

Also on the list are the transportation of sugarcane from farms to millers, locally assembled or manufactured mobile phones, electric bicycles, solar lithium-ion batteries and motorcycles under tariff 8711.60.00. 

"These goods will no longer allow suppliers to reclaim input VAT, potentially increasing production costs where intermediate goods and inputs are involved," he said. 

They noted that the suggested reduced tax rates for Special Economic Zones (SEZs) and the Nairobi International Financial Centre in the budget could turn into tax shelters for the well-connected and politically aligned individuals as "the criteria for qualification remain unclear."

"Similarly, the proposed reduction of the Export and Investment Promotion Levy (EIPL) on select steel products, from 17.5 per cent to 10 per cent, may seem beneficial at first glance, but it warrants closer examination," said Cornelius Oduor, deputy executive director Kenya Human Rights Commission. 

"While the stated intention is to lower construction costs and bolster manufacturing, questions remain about who will genuinely benefit," he added. 

In their analysis of the budget estimates and Finance Bills 2025/2026, part of the new proposals seeks to increase the tax-exempt per diem allowance to Sh10,000 from Sh2,000. 

This, they said, provides disproportionate tax between the rich and the poor as it shelters senior public officials particularly in the Executive, who "already receive generous allowances from their various domestic travels. 

"This situation undermines the principle of progressive taxation and deepens the divide between the well-connected and the struggling majority," he said.  

="https://www.standardmedia.co.ke/national/article/2001520873/let-views-on-finance-bill-count-ex-senator-billow-kerrow-tells-government">Despite ongoing< food insecurity, the CSOs observed that a proposal to reduce allocation for the fertilizer subsidy from Sh14 Billion to Sh8 billion, further compounds the crisis "even as the number of targeted farmers is set to double."

"The Agriculture, Rural and Urban Development (ARUD) sector also faces a Sh3.3 billion budget reduction," stated Abraham Ochieng of Bajeti Hub, hinting at an impending food shortage. 

At the same time, they noted that while commend the additional Sh6 billion and Sh5 billion to the primary healthcare fund and emergency, chronic, and critical illness fund respectively, allocation for free maternity program, Linda Mama, could miss in the 2025/26 budget.

="https://www.standardmedia.co.ke/leonard-khafafa/article/2001520866/this-years-finance-bill-should-not-lead-to-loss-of-lives">Eunice Kamau of Ni Sisi said that failure to allocate funds for the critical program will result in a reduction in the number of women delivering in health facilities under the care of skilled birth attendants. 

"Furthermore, we observe that there is no change in the budget allocation for the national AIDS control program, despite the Sh9.4 billion shortfall in HIV funding due to the recent United States government's stop-work order," said  

Equally alarming, according to Okoa Uchumi, is the proposal to delete Section 59A(1B) of the Tax Procedures Act, which would allow Kenya Revenue Authority (KRA) to access citizens' data without their consent. 

Currently, the data protection Act 2019, prohibits KRA from accessing sensitive personal and customer data, such as bank transactions and mobile money records, without a court order.

"If passed, this amendment would grant the KRA unchecked surveillance powers and unfettered access to our personal information, violating the constitutional right to privacy under Article 31 and the provisions of the Data Protection Act, 2019," said Annette Nerima representing Kenya Human Rights Commission. 

Further analysis, the rights groups observed,  reveals how resources are redirected through supplementary budgets, prioritising programs that entrench state machinery, citing increased budget for State Department of Internal Security by 33 per cent from Sh28 billion in the original 2024/25 budget to Sh37 billion in Supplementary II for the 2024/25 budget. 

However, the rights defenders questioned what the government seeks to achieve by expanding state departments which they believe would overburden the taxpayers. 

="https://www.standardmedia.co.ke/national/article/2001518948/public-participation-on-finance-bill-begins">Recently the government

Constitutional Affairs, a move which the group claims duplicates functions of already existing institutions. 

"Many of these departments were previously programs under others, and now come with higher allocations, increasing administrative costs.

This raises critical questions about Kenya’s commitment to fiscal responsibility, especially amid a growing wage bill and claims of austerity," said  Riithi of TISA.