John Mbadi: New Treasury CS Begins Process To Reintroduce Eco Levy, Other Tax Changes

• Treasury Cabinet Secretary John Mbadi announced plans to reintroduce 49 tax proposals from the withdrawn Finance Bill 2024, excluding controversial items like sanitary pads
• Mbadi emphasised that the Eco levy, originally in the Finance Bill 2024, would return with amendments targeting pollution without burdening ordinary citizens
• The reintroduction of these tax changes aims to help the government generate KSh 150 billion in tax revenue
• Mbadi also hinted at major reforms within the Kenya Revenue Authority (KRA) to address tax evasion and increase revenue collection by up to KSh 400 billion

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research expertise, providing insights into Kenyan and global trends.

The new Cabinet Secretary for Treasury, John Mbadi, has announced that plans are underway to bring back some of the tax proposals contained in the withdrawn Finance Bill 2024.

Speaking during an interview with Citizen TV on Sunday, August 18, Mbadi said that they had begun the process to bring back 49 tax changes.

"They brought about 53 suggested amendments. These 53 have now been reduced to about 49," Mbadi said.

Which tax amendments will be brought back?

Mbadi stated that the Eco levy, originally included in the contentious Finance Bill 2024, held significance and should be reintroduced with appropriate amendments.

However, Mbadi told Citizen TV that tax amendments touching on products like sanitary pads will be left out of the new proposals, noting that the amendments will be designed not to affect normal citizens.

“Eco Levy has some meanings; we will just make sure that they are levied on those items that pollute the environment... Issues that are contentious, like sanitary pads, those we will leave out,” Mbadi said.

Since the Finance Bill 2024 was withdrawn and the Finance Act 2023 was struck down by the Appellate Court, the Treasury is looking to bring about tax amendments to enable tax collections of about KSh 150 billion.

KRA reforms

Mbadi further hinted at plans to reform the Kenya Revenue Authority (KRA) to address loopholes and tax evasion.

According to Mbadi, reforming KRA will enable the government to collect close to KSh 400 billion.

“If we reform KRA the way we want, we can get not less than KSh 400 billion more. In fact, some people even project KSh 600 billion,” Mbadi noted.

What Mbadi's tax changes mean for Kenya

In an exclusive interview with TUKO.co.ke, Deloitte Kenya Associate Director Fred Kimotho welcomed the move to amend the tax laws like the tax amnesty programme.

John Mbadi proposed restoring the Finance Bill 2024 measure to reduce tax expenditures, which currently amount to KSh 525 billion annually.

His plan includes shifting some items from zero-rated to tax-exempt status, allowing the government to collect more revenue and minimise tax refunds.

However, Kimotho warned that this move could lead to an increase in consumer prices, as reducing zero-rated products would likely drive up the cost of goods and services.

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke