Treasury Cabinet Secretary John Mbadi
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In a recent address to the National Assembly, Treasury Cabinet Secretary John Mbadi sought to clarify the government's position on taxation, especially regarding the new Social Health Authority (SHA) and Housing Levy.
As concerns about perceived over-taxation rise among Kenyans, Mbadi provided a detailed analysis of the tax implications for middle-income earners. During the mid-term retreat, Mbadi acknowledged that the introduction of the Housing Levy and Universal Health Care deductions has been misunderstood as excessive taxation. He stated that a Kenyan earning Sh60,000 would experience a total salary deduction of Sh2,550 for these two levies.
This equates to a combined rate of 4.25%, comprising a 1.5% deduction for the Housing Levy and a 2.75% deduction for the SHA. Mbadi emphasizes that, without these deductions, Kenyans could face a heavier financial load. He draws a comparison to the prior National Hospital Insurance Fund (NHIF) system, noting that under that regime, a similar salary would have resulted in a Sh1,700 deduction for health coverage alone.
Under the new deductions, the total amount deducted from the same salary for both SHA and housing initiatives stands at Sh1,785, leading to an additional burden of Sh85. These remarks come amid heightened anxiety among Kenyans regarding the economic situation and increasing deductions from salaries. Further complicating the fiscal landscape is the recent announcement by the National Social Security Fund (NSSF) indicating a 6% increase in contributions.
Starting February 1, minimum contributions will escalate from Sh420 to Sh480, while higher-income earners will see their contributions double from Sh2,160 to Sh4,320. In response to mounting concerns over the SHA, Deputy President Kithure Kindiki has promised a review of the means-testing tool employed by the Social Health Authority. This review aims to ensure that vulnerable populations, including small-scale traders and motorcycle taxi operators, receive adequate coverage under the new healthcare system.