State institutions have been directed to cut wasteful spending as the government seeks to reduce taxes
The Kenyan government will seek suggestions from the public on new legislation aimed at increasing revenue and addressing economic challenges, National Treasury Cabinet Secretary John Mbadi announced on Monday.
Mbadi said the move is aimed at avoiding a repeat of the violent protests that forced the government to withdraw previous legal changes.
“Public participation is an integral part of our public finance management system,” the minister said during a budget preparation event in the capital, Nairobi.
In June, Kenyan President William Ruto abandoned the 2024 Finance Bill, which aimed to raise $2.7 billion in taxes, after demonstrators stormed parliament and launched protests across the country. The events also forced the president to dismiss the majority of his cabinet. Ruto, who had championed the legislation as essential for securing a loan from the International Monetary Fund (IMF) and avoiding a debt default, has stated that the government would consider alternative measures, including budget cuts for his office.
Mbadi, who was appointed from the opposition last month as President Ruto moved to form a broad-based administration, had initially said the government would reinstate some of the tax measures in the withdrawn finance bill. He had insisted that they were required to cover essential spending, including the payment of teachers’ wages. The minister, however, backtracked on that plan following public outrage and threats of further protests.
Speaking at the launch of the 2025/26 Budget Preparation Process on Monday, Mbadi said the government is “barely managing.”
“This is not where we wanted to be, but we are here,” he said, announcing that he “will be issuing a circular… inviting the public’s participation to submit proposals on some legislative reforms to improve” Kenya’s current economic situation.
Mbadi said the government plans to reduce taxes in the medium-term budget, lowering value-added tax from 16% to 14% and corporate income tax to 25%. He also directed state institutions to reduce wasteful spending, such as on hospitality, conferences, and travel, as part of cost-cutting efforts.
“The Government is operating under constrained fiscal environment… Prioritization during resource allocation will be critical in ensuring low-priority expenditures are dropped or deferred to give way to high-priority service delivery programmes,” the minister said.
