The controversy erupted after recent Treasury statements and budget proposals appeared to contradict previous assurances that the Kenya Kwanza administration would ease the tax burden on salaried employees struggling with the rising cost of living.
A section of Members of Parliament, trade unions and economic analysts have accused the Treasury of making a silent U-turn on tax relief plans despite repeated pledges to put more money into workers’ pockets.
Speaking during recent budget consultations, Mbadi defended the government’s position, arguing that Kenya’s current economic realities require the state to prioritize revenue collection in order to fund development projects and service public debt obligations.
According to the Treasury boss, reducing PAYE at this stage could create a massive financing gap and affect essential government operations including healthcare, education and infrastructure projects.
However, critics say the explanation contradicts earlier commitments made by senior government officials who promised tax reforms aimed at cushioning ordinary Kenyans from economic hardships.
Leaders from workers’ unions have accused the Treasury of overburdening formally employed Kenyans while failing to address corruption and wastage in public spending.
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Central Organization of Trade Unions (COTU) officials warned that workers are already grappling with multiple deductions including the housing levy, Social Health Insurance contributions and high fuel prices, leaving many households financially strained.
“The government cannot continue squeezing salaried Kenyans while promising relief during campaigns and then changing tune once in office,” one union official stated.
The debate has also sparked sharp reactions online, with many Kenyans questioning whether the administration has abandoned its promise of lowering the tax burden on ordinary citizens.
Economic experts remain divided on the matter. While some argue that reducing PAYE could stimulate household spending and economic growth, others insist that the government’s fragile fiscal position leaves little room for tax cuts.
Analysts note that Kenya is currently under pressure to increase domestic revenue collection as the country seeks to manage debt repayments and reduce reliance on external borrowing.
Opposition leaders have now seized on the issue, accusing the government of misleading workers and failing to deliver on key economic promises.
Several lawmakers are expected to raise the matter in Parliament as debate on the upcoming Finance Bill intensifies in the coming weeks.
Political observers believe the PAYE debate could become a major political issue ahead of future elections, especially among urban middle class voters and formally employed Kenyans who feel increasingly burdened by taxation.
Despite the backlash, Treasury officials maintain that any future tax adjustments will depend on economic performance and the country’s overall fiscal stability.
