Treasury will not take any action against any money transfer service provide who choose to pass on the additional 10 per cent tax to consumers.

Finance Minister Njeru Githae says although he expected the companies to absorb the tax and pay out of their profits, the government has no way forcing them.

Safaricom announced it has increased its M-Pesa money transaction charges by 10 per cent starting this Friday, for its estimated 16 million customers.

"It is a free market and we cannot interfere," Githae said. "At best, we can only give advice, but it is upon them to agree or reject."

He said the government had no other option of raising funds to pay teachers, doctors and lecturers who were on strike at the time the tax was proposed in February last year.

"There was no alternative and we had no intention of running into deficits," said Githae

He said they are now targeting plugging of tax revenue leakages through counterfeits where an estimated Sh30 billion is lost annually, as well as cutting out crooks in motor industry inspection and road licences through removal of cash transactions.

He said beer, wine and spirits revenues will be increased through installation of Kenya Revue Authority stamp tax gadgets at manufacturing plants and use of mobile automatic tax stamp readers to counter illegal sale of counterfeit products.