NAIROBI, Kenya— Treasury Cabinet Secretary John Mbadi has defended the government’s cautious tax approach, following criticism over what some lawmakers see as discriminatory treatment of sugarcane farmers compared to their counterparts in the tea sector.
Appearing before the Senate on Wednesday, Mbadi responded to concerns raised by Kericho Senator Aaron Cheruyiot, who questioned why the transport of sugarcane is subject to Value Added Tax (VAT) while tea transport remains exempt.
“I don’t understand why the Treasury wants to treat tea farmers and sugarcane farmers separately. They are all citizens of this republic,” said Cheruyiot, adding that sugarcane growers deserve the same tax relief afforded to tea farmers.
The senator argued that continued taxation on sugarcane transportation imposes unfair costs on farmers and risks deepening economic inequality in Kenya’s agricultural sector.
“In every Finance Bill, it is like sugarcane is always left out,” he said. “Yet, transportation of tea is exempt. Why the difference?”
In his response, CS Mbadi said the Treasury had deliberately avoided introducing tax measures that would reduce citizens’ disposable income, especially in light of mounting public pressure against rising costs of living.
“It is true that we have not made major changes in taxes that will disadvantage taxpayers,” Mbadi told the Senate.
He noted that while the push for lighter taxes may seem like a reaction to recent youth-led activism, his personal position against excessive taxation predates his Cabinet appointment.
“Senator Sifuna very well knows my stand on taxes even before I joined the Executive. I am one person who does not believe that higher taxes mean more revenue,” Mbadi said.
While the CS acknowledged the frustration of sugarcane farmers, he stopped short of promising policy changes in the current Finance Bill.
Instead, he said the Treasury is listening and would continue reviewing tax policies “with fairness and sustainability in mind.”
On broader tax reforms, Mbadi revealed that the government had considered reducing Pay As You Earn (PAYE) during preparations for the Finance Bill, 2025, but held off due to revenue collection shortfalls at the Kenya Revenue Authority (KRA).
“We even did some simulations on how to reduce PAYE. What stopped us was the failure by KRA to meet its revenue targets,” he said.
He added that the Treasury had also contemplated reducing corporate tax from 30 to 28 percent, but again delayed the move over fiscal concerns.
“We must first be sure that the system can support it,” Mbadi said, adding that future tax relief could be considered depending on the performance of ongoing reforms at KRA.
The CS also hinted at a possible restructuring of the controversial housing levy, acknowledging that deductions have sparked dissatisfaction among salaried workers.
“There is a discussion around restructuring the housing levy because it has benefits. But at the same time, the individual employees, those with payslips, have complaints which you cannot ignore,” he said.
Public hearings on the Finance Bill, 2025, are ongoing across the country, with MPs urging citizens to actively participate in shaping the final law.
