Nairobi — The proposed Finance Bill 2026 is heavily tilted toward raising revenue rather than stimulating economic growth or easing the cost of living, tax expert Kiema Onesmus has warned.
Speaking during an interview on Capital in the Morning, the KPMG East Africa Associate Director for Tax and Regulatory Services argued that most proposals in the Bill are designed to increase government collections at a time when Kenyans are already grappling with rising living costs and shrinking disposable incomes.
"The proposals in the Finance Bill seem to be revenue generators as opposed to cost-of-living cushions or economic stimulators," Onesmus said.
The government is seeking to raise an additional Sh120 billion through the Finance Bill 2026 as part of broader efforts to increase tax revenue from Sh2.7 trillion in the current financial year to Sh2.9 trillion in the 2026/27 fiscal year.
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However, Onesmus questioned the feasibility of the targets, noting that the Kenya Revenue Authority had already struggled to meet existing collection goals amid a slowing economy and global economic uncertainty.
"You cannot tax yourself to prosperity," he said, quoting former British Prime Minister Winston Churchill.
He explained that, unlike countries with vast natural resources such as oil, gold and minerals, Kenya largely depends on taxation as its primary source of revenue.
"What a pity, because it's either we tax ourselves or we borrow. And the sad reality is that we are finding ourselves at a point where we are milking the cow dry," he said.
He warned that Kenya risks exhausting its taxable base without introducing policies capable of driving investment, production and broader economic expansion.
The expert further noted that several proposals in the Finance Bill suggest the government may have exhausted nearly all available taxation avenues.
VAT on digital transaction
Among the proposals criticised by Onesmus were plans to impose a 16 per cent VAT on digital transaction charges, reclassify electric vehicles from zero-rated to VAT-exempt status, expand Kenya Revenue Authority access to personal financial data and move tax return filing deadlines from June to April.
According to the tax expert, taxing digital payments could reverse Kenya's gains in financial inclusion and digital commerce by discouraging the use of mobile money platforms such as M-Pesa.
"We've taken huge strides toward a cashless economy, but these proposals could set us back significantly," he said.
He also raised concerns over proposals granting KRA broader powers to access personal financial and transactional data, arguing that the measures risk eroding public trust and creating fear among ordinary Kenyans using digital platforms for legitimate activities such as chamas and community fundraising.
No incentives for EVs
Onesmus further criticised the removal of incentives for electric vehicles and electric bicycles, saying the move contradicted global efforts to promote green energy and transition away from fossil fuels.
"Electric cars are the future. Countries like Ethiopia are encouraging adoption through incentives, while we are making them more expensive," he said.
The expert additionally warned that changes to filing timelines and expanded e-TIMS compliance requirements could place significant pressure on businesses, farmers and small traders who may lack the systems and documentation required to comply.
He cited persistent data mismatches in KRA's pre-populated tax returns as evidence that the country's tax infrastructure still faces operational challenges.
Beyond taxation, Onesmus said the broader problem lies in declining public confidence over how tax revenues are utilised.
"I don't think Kenyans would have as much pain paying taxes if they could see smooth roads, lower living costs and better services," he said. "But people feel their payslips are being raided while their quality of life continues to deteriorate."
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He rated the proposed Finance Bill 2026 at "three out of ten," saying it lacked meaningful economic growth incentives capable of attracting investment or stimulating local industries.
Instead of introducing additional taxes, Onesmus urged the government to consider targeted tax incentives for sectors such as manufacturing and agro-processing in order to create jobs, attract foreign investment and expand the country's productive base.
"For me, economic growth triggers would come through incentives, not more taxation," he said.
He also encouraged Kenyans and business associations to actively participate in the ongoing public participation process before the Bill is enacted into law.
"The moment it becomes an Act, the ship has already sailed," he warned.
