Inside MPs clash over Finance Bill tax proposals

A heated debate unfolded in the National Assembly yesterday during the afternoon sitting over  the Finance Bill, 2026, as MPs from across the political divide raised concerns over several clauses.

After Finance Committee Chairperson and Molo MP Kuria Kimani tabled the report following public participation, members engaged in a spirited exchange on the proposed measures.

Deputy Minority Leader Robert Mbui led calls for amendments, questioning provisions across the Bill. He was compelled to withdraw and substantiate his claim that the Bill proposed taxing mitumba traders.

Mbui said the Bill is not beneficial to Kenyans and urged amendments, arguing it seeks to raise over Sh100 billion from already burdened taxpayers.

“I rise to oppose this draconian, punitive Finance Bill, 2026. It seeks to extract more money from Kenyans. The government must explore other ways of raising revenue,” he said.

He said earlier proposals for tax relief for those earning below Sh30,000 were missing. He dismissed claims that the Bill merely widens the tax bracket, saying it increases burden on households and affects basic needs including food, clothing and shelter.

Leader of Majority Party Kimani Ichung’wah accused Mbui of misleading the House on mitumba taxation.

“This Bill is before us and I have gone through it clause by clause. What Mbui is saying is propaganda. He must show where in the Bill that tax exists,” he said.

Speaker in the Chair Farah Maalim called the House to order, urging accuracy and compliance with Standing Orders and asking Mbui to substantiate or withdraw his claims.

“This is a House of dignity. You must substantiate your claims on mitumba taxation,” he ruled.

Mbui also raised concerns over rental income taxation, saying the Bill introduces a 30 per cent Non-Resident Rental Income Tax and warning landlords would pass costs to tenants.

Ichung’wah dismissed this, citing Standing Order 91, saying the provision only applies to non-residents and does not affect Kenyan landlords. “Rental income remains taxed at 7.5 per cent,” he said.

Kuria Kimani said the proposal clarifies existing law requiring withholding tax on non-resident landlords, adding there is no change for resident landlords.

He explained tenants often cannot verify residency status, hence the need for clarity.

Bumula MP Jack Wamboka said landlords may pass costs to tenants, increasing burden on households.

Mbui further warned of proposals allowing KRA to use third-party data to assess tax liability, saying it could disadvantage ordinary Kenyans relying on mobile money.

“Businesses operate differently. How can data alone determine income?” he asked.

Kuria Kimani said the Bill is a reform framework aimed at simplifying tax laws, improving compliance, and modernising administration using technology and data.

He gave revenue projections of Sh25 billion in 2022, Sh211 billion in 2023, Sh344 billion in 2024, Sh30 billion in 2025, and Sh98.9 billion in 2026.

He said the measures aim to raise Sh98.9 billion for the budget.

He added the committee seeks to reduce tax expenditures, enhance compliance and align incentives with national priorities.

The committee recommended removing software distribution from the definition of royalty, saying it does not generate royalties.

On mobile phones, he said taxation at activation is not yet feasible due to lack of systems and coordination with telecom operators and the Communications Authority.

Homa Bay Town MP Peter Kaluma said the Bill was difficult due to economic constraints and focus was on efficiency, not new taxes.

Kajiado North MP Onesmus Ngogoyo opposed the Bill, saying some clauses introduce new taxes through indirect measures such as shifting goods from zero-rating to exemption, and proposing duties on ceramics and sanitary fixtures, which could raise consumer prices.

Weeks of consultations also saw MPs emphasize the need to balance revenue mobilisation with economic recovery, noting that households remain under pressure from high cost of living and inflationary pressures

Several members stressed that any new framework should avoid punishing compliant taxpayers while widening the tax base to capture informal sectors more effectively.

The committee further indicated that implementation timelines for certain digital tax reforms may require phased rollout to allow institutions to upgrade systems, train staff and improve inter-agency coordination.