Treasury Cabinet Secretary (CS) John Mbadi has defended controversial Finance Bill proposals targeting mobile phones and mitumba imports.
The CS said that the measures were informed by public participation and stakeholder consultations conducted across the country.
Speaking during an interview with renowned journalist Yvonne Okwara, Mbadi said the proposals were not imposed but emerged from nationwide budget discussions with Kenyans.
As a result, he dismissed claims that public participation as merely a formality.
“A lot of these decisions that we are arriving at, actually came from public participation. The proposal on Mitumba and phone taxation came from public participation. The mitumba people came and sat with us and we discussed.” Mbadi said.
Mbadi Calls for Greater Public Engagement in Budget Process
Amid criticism surrounding some Finance Bill proposals, John Mbadi urged Kenyans to take a more active role in public participation during the early stages of the budget-making process.
According to Mbadi, the government usually invites members of the public to sector hearings and consultations, but participation levels are sometimes low until proposals are unveiled.
He encouraged Kenyans to engage more consistently in the process to help shape policy decisions before the Finance Bill is finalized.
“I would tell you that the problem is sometimes we don’t take interest, we advertise and we tell people please go to sectoral hearings, submit your proposals, how you want the envelope to be shared.
“People sometimes assume and then they want to come and say, you have just come up with figures, we don’t know where they have come from.”Mbadi said.
Mitumba Tax Proposal Explained
The Finance Bill also proposes changes targeting imported second-hand clothes and footwear.
According to Mbadi, the proposal followed consultations with mitumba traders.
He said the discussions led to an agreement to streamline taxation by anchoring it at clearly defined points such as import entry and designated revenue collection stages.
Under the proposals, a 5% tax would be applied on the customs value of imported worn clothing and footwear, collected at the point of importation.
The goods would also continue to attract the existing 16% VAT.
In addition, the framework is designed to treat mitumba imports as commercial goods with an assumed profit margin, on which a one-off 30% income tax would be applied.
Mobile Phone Tax Proposal Explained
The Finance Bill proposes a 25% excise duty on mobile phones, to be charged at the point of activation rather than at the point of importation.
Currently, imported mobile phones attract multiple taxes and levies, including 16% VAT, 10% excise duty, 25% import duty, a 2.5% Import Declaration Fee (IDF), and a 2% Railway Development Levy (RDL), bringing the total tax burden to about 55.5%.
Under the proposal, most of these separate charges would be consolidated into a single 25% excise duty, with VAT, IDF, RDL, and import duty on phones expected to be removed.
The government says the reform is aimed at simplifying a complex tax structure and reducing the cumulative burden along the supply chain.
Treasury has also dismissed claims that the proposal introduces a new tax burden, saying it instead restructures existing levies to ease compliance and streamline collection.
Public Participation Process
Mbadi reiterated that the budget-making process involved extensive public engagement across the country, including forums in Migori, Kakamega, Kiambu, Meru, Mombasa, and Kilifi.
He said the process began as early as September last year, noting that the executive made sufficient efforts to collect public views before finalizing the proposals.
“I have personally led public participation on budget process. In terms of public participation, I don’t think anyone should fault the executive; we did all we could” he said.
