Civil society alarm: Finance Bill will increase cost of food, healthcare
The National Treasury building.
Civil society groups have raised the alarm over Kenya’s 2025/26 national budget, warning that unless the government restructures its spending priorities, the cost of living, food, healthcare and education could rise sharply.
At the heart of their concern is the government’s plan to spend Sh4.24 trillion against projected revenues of Sh3.32 trillion, resulting in a Sh876.1 billion deficit. According to lobbyists under the Okoa Uchumi campaign, this shortfall largely financed through domestic borrowing threatens both economic stability and citizens’ well-being.
Under the Okoa Uchumi banner, organisations including the Kenya Human Rights Commission (KHRC), Bajeti Hub, Transparency International-Kenya, Institute of Social Accountability and Inuka ni Sisi argue that the 2025 Finance Bill fails to address inefficient and poorly prioritised spending that has long undermined Kenya’s fiscal stability.
While the bill aims to enhance tax administration and revenue collection, the groups warn it may worsen inequality, weaken service delivery and undermine constitutional rights.
One controversial provision is the proposed increase in tax-exempt per diem allowances from Sh2,000 to Sh10,000. Although framed as a technical revision, lobbyists argue that it disproportionately benefits senior public officials who already enjoy generous travel benefits.
“This situation undermines the principle of progressive taxation and deepens the divide between the well-connected and the struggling majority,” said Annet Nerima, Programme Manager at the human rights commission.
Even more troubling, the bill proposes deleting Section 59A(1B) of the Tax Procedures Act, which currently bars the Kenya Revenue Authority (KRA) from accessing personal financial data without a court order.
The amendment would grant KRA broad surveillance powers, which the groups deem unconstitutional and vulnerable to political misuse such as voter profiling.
The bill also introduces tax incentives for entities within Special Economic Zones and the Nairobi International Financial Centre. Though presented as pro-investment measures, the criteria for qualifying remain opaque. Lobbyists warn that such incentives may function as tax shelters for politically connected entities, worsening fiscal inequality.
The proposed reduction of the Export and Investment Promotion Levy on certain steel products, from 17.5 per cent to 10 per cent, is also contentious.
While potentially reducing construction costs, critics argue that politically connected large importers are likely to benefit more than local manufacturers or consumers. The move, they caution, could discourage local value addition.
Equally controversial is the plan to remove zero-rated VAT status from essential goods such as solar panels, electric vehicles, bioethanol stoves, animal feed inputs and raw materials for medicine. Reclassifying them as VAT-exempt would prevent producers from reclaiming input VAT, thereby raising production and retail costs.
Lobbyists warn this could make medication unaffordable for chronically ill patients and increase farmers’ input costs, deepening food insecurity.
Additionally, it could undermine Kenya’s environmental goals by raising the cost of clean energy technologies.
Another worrying clause is the proposed deletion of Section 17(5)(c) of the VAT Act, which allows businesses to offset excess input VAT against other tax liabilities. Its removal would strain the cash flows of small and medium-sized enterprises already burdened by delayed VAT refunds.
The proposed budget also reveals what the lobbyists term as misplaced priorities. While the Public Administration and International Relations sector is set to receive 11 per cent of the national budget, health and social protection are allocated only 6 per cent and 3 per cent, respectively.
The groups also criticised a proposed Sh4.3 billion cut to free primary education, including a Sh600 million slash in the school feeding programme, despite rising enrolment numbers. Meanwhile, subsidies for higher education institutions and technical training colleges are set to increase. While supportive of enhanced funding for TVETs and HELB, lobbyists question why the most vulnerable, primary school pupils, are being neglected.
In agriculture, a proposed cut to fertiliser subsidies from Sh14 billion to Sh8 billion comes even as the government plans to double the number of targeted farmers, raising doubts about the feasibility and fairness of the plan.
The health sector, too, faces contradictions. While an additional Sh6 billion has been allocated to the Primary Health Care Fund and Sh5 billion to critical illness coverage, the groups argue that this remains insufficient.
The Linda Mama maternity programme has been zero-funded, and there is no new allocation for HIV programmes, despite a Sh9.4 billion funding shortfall after the withdrawal of US donor support.
Lobbyists argue that relying on foreign aid for essential services is unsustainable and irresponsible.
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Security sector allocations have also sparked criticism. The National Police Service and its commission are set to receive 9 per cent and 38 per cent budget increases, respectively.
With Kenya’s recent history of police brutality, activists fear that the increased funding could entrench state securitisation and suppress civil liberties. In contrast, oversight bodies such as the Judiciary and the Independent Policing Oversight Authority face stagnant or reduced funding, weakening accountability mechanisms.
Lobbyists further warned about Kenya’s growing public debt. For every Sh100 collected in revenue, more than Sh60 goes toward debt repayment, severely restricting development and social investment.
They argue that this trend is worsened by the increasing use of supplementary budgets, which often redirect funds to executive offices and newly created bureaucracies, undermining fiscal discipline and public trust.
To make their opposition clear, the Okoa Uchumi coalition has formally submitted objections to Parliament, urging lawmakers to amend both the Finance Bill and national budget.
They called for urgent action to curb wasteful spending, abolish redundant roles, and redirect resources toward health, education, agriculture and social protection – sectors critical to Kenya’s development and the welfare of its people.