In a dramatic showdown between fiscal caution and political will, President William Ruto has overridden Treasury concerns to implement sweeping tax relief for Kenya’s low-income workers.
The confrontation came to light during the National Prayer Breakfast at Safari Park, where President Ruto revealed that Treasury officials had warned him about the substantial financial implications of removing PAYE tax for workers earning below Sh30,000.
“The Treasury came back and said, ‘Oh, Mr. President, you know this is going to be very big. You know it’s going to cost us Sh40 billion in this budget,’” Ruto disclosed. His response was unequivocal: “I told them, ‘Let’s do it. Let’s do it.’”
This decision marks a significant shift in government policy, particularly after Treasury Cabinet Secretary John Mbadi had publicly stated that PAYE relief for low-income workers did not feature in the proposed Finance Bill 2026. Mbadi had cited ongoing simulations and concerns about revenue collection and overall economic impact as reasons for caution.
“We are running simulations, and we have some reports. We needed to check how different factors are happening at the same time, and we are also assessing the overall effect on the economy,” Mbadi had explained to the media.
The Treasury’s approach involved widening the personal income tax base to offset the revenue loss from exempting low-income earners. However, the President’s directive now supersedes these technical considerations.
Under the approved plan, workers earning up to Sh24,000 who currently pay 10% PAYE will be completely exempted. The relief extends to all workers earning up to Sh30,000 monthly. Additionally, the proposals include lowering the 30% tax bracket to 25% for middle-income earners.
Projections indicate workers will see net pay increases ranging from Sh731 to over Sh2,000, depending on their income levels. For a country grappling with high living costs, this represents meaningful financial relief for thousands of households.
The decision highlights the tension between fiscal prudence and political responsiveness that governments worldwide face. For those interested in understanding economic policy better, books on public finance and budgeting can provide valuable insights into these complex trade-offs.
Full story available at: https://nairobiwire.com/2026/05/ruto-paye-tax-relief-low-income-earners-sh30000-kenya-2026.html