By Makana Edith Salome
Former Deputy President and Democratic Change Party (DCP) leader Rigathi Gachagua has launched a scathing attack on the proposed Finance Bill 2026/2027, describing it as the most punitive tax proposal in Kenya’s history.
Gachagua warned that the Bill will deepen the financial burden on already struggling households and businesses.
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Addressing the media in Nairobi, Gachagua accused the government of relying excessively on taxation despite persistent shortfalls in revenue collection.
“Dear Kenyans, let us now look at the punitive Finance Bill 2026–2027. This is the worst Finance Bill in the history of Kenya. It increases heavy taxation pressure, doubles compliance pressure and escalates household costs,” he said.
According to Gachagua, the government has failed to address inefficiencies in revenue collection and instead continues to introduce new taxes and levies that suppress economic activity.
“The government revenue collections have consistently fallen short of targets. Yet the response has been to introduce new taxes and illegal levies rather than addressing inefficiencies, broadening the tax base or stimulating economic growth,” he said.
Among the proposals he criticized is the reclassification of several products from zero-rated to VAT-exempt status, including solar energy equipment, electric mobility products, locally assembled mobile phones and animal feeds.
He argued that the move would increase production costs and ultimately raise prices for consumers.
“The inevitable result is higher prices for consumers, farmers and businesses,” Gachagua said, warning that the changes could negatively affect critical sectors such as renewable energy, agriculture and digital connectivity.
The DCP leader also opposed the proposed 16 per cent Value Added Tax (VAT) on digital payment services, saying it would make mobile money transactions and other digital financial services more expensive for millions of Kenyans.
“There will be more pain at M-Pesa shops and ATM machines,” he said, adding that traders, schools, hospitals and households that rely on digital payments would bear the extra costs.
Gachagua further criticized plans to raise the excise duty on mobile phones from 10 per cent to 25 per cent, arguing that mobile devices are no longer luxury items but essential tools for education, business, communication and access to financial services.
“Mobile phones are no longer luxury goods. They are essential tools for education, business, communication, financial services, content creation and job searching,” he said.
He also expressed concern over proposals targeting non-resident landlords, saying the measures could discourage investment by Kenyans living abroad and potentially push rental costs higher.
“These measures are unfairly targeting our diaspora communities who should be investing back home while they work abroad,” he said.
On tax administration, Gachagua opposed provisions that would allow tax authorities to pursue collections while disputes are still pending before tribunals or courts.
“The proposed removal of protections against agency notices during active tax appeals will allow tax authorities to freeze bank accounts and enforce collection actions while disputes are still before tribunals or courts,” he warned.
He argued that such powers could cripple small and medium-sized enterprises and undermine investor confidence.
Gachagua urged the government to focus on reducing wastage, settling pending bills, protecting strategic sectors such as health, education and agriculture, and improving tax administration rather than introducing additional taxes.
He warned that excessive taxation cannot deliver economic prosperity.
“Kenya cannot tax its way to prosperity. A nation trying to tax itself into prosperity is like a man standing in a bucket and trying to lift himself up by the handle,” he said.
