Kenya’s private sector leaders are sounding the alarm over the country’s rising tax burden, saying it is driving up production costs, suppressing consumer spending, and placing businesses under immense pressure.

Speaking at the 25th anniversary celebration of audit and financial consultancy firm MGK, industry veterans warned that the country risks slipping deeper into economic stagnation if the current tax regime remains unchecked.

Eric Kimani, founder of Palm House Dairies and a respected philanthropist, described the tax situation as unsustainable, noting that it is shrinking disposable incomes and strangling demand across the board.

“Tax is a major issue,” Kimani said. “A few years ago, we were paying Ksh30 out of every Ksh100. Now it’s Ksh35. That may seem small, but it’s significant especially when people are spending less. More tax doesn’t always mean more revenue.”

His concerns reflect growing frustration among entrepreneurs who say the high tax rates are not matched by improvements in public services.

Kimani questioned the government’s spending priorities, arguing that accountability is just as critical as revenue collection.

“We don’t mind paying taxes if we see value. In countries like Sweden, you give Ksh65 per Ksh100, but in return you get free healthcare, education, and infrastructure. That’s what value looks like,” he said.

Figures from the Federation of Kenya Employers indicate that taxes now eat up between 35% and 45% of income, a level many believe is undermining both formal and informal sectors.

Small businesses, in particular, are struggling as consumer demand continues to dip, forcing many to either scale down operations or shut their doors altogether.

“The economy is caught in a cycle of low consumption and shrinking business activity,” Kimani warned. “If people can’t buy, businesses can’t sell. And if businesses can’t sell, jobs disappear.”

In the face of this economic turbulence, MGK founder Michael Kimani stressed the importance of resilience through innovation, agility, and operational efficiency.

“To survive, you have to adapt,” he said. “We’ve invested in tech tools and partnerships that boost efficiency and strengthen client service. It’s about getting more done with fewer resources.”

MGK’s approach, which focuses on technology-led transformation, has helped the firm weather recent challenges while continuing to deliver value.