Cabinet Approves Finance Bill 2025, Now Tabled in Parliament

In a calculated shift meant to calm Kenya’s restless youth and restore public confidence, the Cabinet has officially approved the Finance Bill 2025, marking a decisive break from the aggressive tax hikes that sparked deadly protests in 2024.

The Bill, tabled in Parliament on Wednesday, takes a different route — no new taxes, no higher excise on alcohol or cigarettes, and no dramatic new levies. Instead, the Ruto administration is betting on tightening tax enforcement, closing revenue loopholes, and using tech-driven reforms to catch tax cheats.

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✅ From Crisis to Calm: Cabinet’s Tactical Approval

The Cabinet brief released ahead of the tabling stated:

“Cabinet approved the Finance Bill, 2025, which focuses primarily on closing loopholes and enhancing efficiency, including addressing loopholes related to tax expenditures that have historically been exploited to siphon funds from public coffers.”

This strategic tone was set to prevent a repeat of the June 2024 protests, where Kenyans — mostly from Generation Z — marched against the Finance Bill 2024 that proposed over KES 360 billion in new taxes. Protesters stormed Parliament. Over 20 were killed. The Bill was withdrawn.

The Cabinet has now chosen reform over confrontation.

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📊 Key Features of the Finance Bill 2025

❌ No New Excise or Consumption Taxes:

• No increases on alcohol, cigarettes, betting, sugar, or imports.

• No new VAT on bread, fuel, or mobile money.

🔁 Shift in VAT Structure:

• Products moving from zero-rated VAT to VAT-exempt include:

  • Locally assembled phones

  • Animal feed

  • Raw pharma materials

  • Solar and lithium batteries

  • Electric bikes

This subtle move prevents VAT refunds for manufacturers, meaning the extra cost will quietly be pushed to consumers.

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🕵️‍♂️ KRA’s New Powers: Digital Surveillance of Tax Cheats

A major highlight is a proposed amendment to the Tax Procedures Act — now allowing KRA to integrate directly with business systems, removing previous legal barriers.

Now KRA can:

• Access real-time payment data from businesses

• Speed up tax collection

• Reduce legal tax disputes

• Detect inflated VAT refund claims

Additionally, the iTax system is now being integrated with:

• IFMIS (public financial system)

• GHRIS (HR for government staff)

• Central Bank payment systems

This move directly targets corrupt government suppliers and under-declaring public servants.

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📉 Still a Draft, but Direction is Clear

Kuria Kimani, Chair of the Finance and Planning Committee, noted:

“It is a draft document that is under review. Some proposals will be adjusted in the final document expected next week.”

So while it’s not final, the tone is clear: fix the tax base, don’t inflame the streets.

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🔙 2024 Flashback: Painful Lessons

• June 2024: Finance Bill withdrawn after protests and Parliament invasion.

• December 2024: Government reintroduces some taxes through the Tax Laws (Amendment) Act 2024, including:

  • Excise hikes on alcohol, cigarettes, imports

  • Betting tax raised from 12.5% → 15%

  • SEP (Significant Economic Presence) Tax replaces Digital Services Tax

  • Fertiliser and pesticides shifted to VAT-exempt

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⛽️ Fuel & Hidden Levies Still in Play

Even as taxes freeze in 2025, other costs are climbing:

• Fuel levy hiked from KES 18 to KES 25/litre to raise KES 30B

• Toll stations to return on major highways

• Housing Levy at 1.5% of gross salary (plus employer match)

• Social Health Insurance Fund up to 2.75% of income, uncapped

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🧠 What It Means: Gen Z Won the Battle, Government Still Needs Revenue

The Cabinet’s move is a political strategy disguised as a policy shift. By avoiding headline-grabbing tax hikes and quietly altering refund structures, the government appears calm on the surface while working aggressively under the hood to plug its deficit.

It also reflects the growing power of Kenya’s youth, who forced change with their voice — and paid with blood. Now, they’ve bought some peace. But prices may still rise, and enforcement will get tougher.