Treasury clarifies tax changes, assures no VAT on essential goods

Treasury Cabinet Secretary John Mbadi has dismissed claims that the government is introducing new taxes on bread, milk, unga, and neonatal care, describing such reports as propaganda.

Speaking during a town hall meeting on Monday evening in Kibera, Nairobi, the CS said the Finance Bill currently before the National Assembly contains no proposals to tax these essential items, accusing the opposition and some individuals of spreading fear and misinformation for political gain.

"There is nowhere in that bill where we are putting VAT on bread. We have not even touched bread. It’s not even mentioned in that bill. Milk is not even mentioned. Unga is not even mentioned," said Mbadi.

"That bill that is being talked about on social media is not my bill. It is a bill that is manufactured by the opposition, and you seem to have bought it."

Mbadi also clarified that the government has no plans to increase VAT from 16 to 18%, and said suggestions that newborn care will be taxed are false.

"I heard that we are going to tax newborn babies. That is a propaganda bill. The actual bill, which I carry here today, you can read it from page one to the last page. There’s nothing like that," he said.

The treasury boss defended the proposal to move items like e-bikes and mobile phones from zero-rated to exempt status, saying this is meant to close loopholes being exploited by unscrupulous businesses.

"Our tax policy is to discourage zero rating of commodities. It is being abused and it is not passed to the consumers," he said.

He added, "These are traders who collude with KRA officers and make fictitious claims to get money they do not deserve. That money is yours — Kenyans go to work every day, pay taxes, and then someone else takes it in the name of zero rating."

On the taxation of scrap metal dealers, Mbadi explained that no new taxes are being introduced but rather existing tax provisions are being clarified.

"What we are doing is just to define results in capitalism. The tax was already there. So we are not bringing any new tax on scrap dealers," explained the CS.

He also responded to concerns about taxation of persons living with disabilities and charity-based institutions, saying tax exemptions remain in place but must be applied for through the proper process.

"If you are providing some of these facilities, you can seek tax exemption. But you need to avoid abuse," he said. "We approve many of them almost daily."

On the issue of the Kenya Revenue Authority accessing financial data, Mbadi said there is no threat to personal privacy under the new system, and that KRA is only interested in financial information from banks and institutions.

"No one will come for your personal information. KRA cannot. Its interest is only on financial information, not your personal secret," he said.

Mbadi urged Kenyans to focus on facts and avoid being misled by falsehoods, especially in a politically charged environment.

"Let us not peddle propaganda just to create distortion," he said. "We are all Kenyans. This country belongs to all of us."

He acknowledged the concerns raised by young people, especially those without jobs, and said the government is working to improve the economy and create opportunities.

"The role of government is to make sure that we create an enabling environment for businesses to thrive, for investment to expand, and to create job opportunities for our people," he said