In a dramatic showdown between executive authority and fiscal caution, President William Ruto has overridden Treasury objections to implement sweeping tax relief for Kenya’s low-income workers. The decision reveals the tension between political will and economic pragmatism in Kenya’s governance.
Treasury Cabinet Secretary John Mbadi had expressed serious reservations about the proposed PAYE exemptions, warning that removing taxes for workers earning up to Sh30,000 would cost the government approximately Sh40 billion. The Treasury chief had notably excluded the relief measures from the proposed Finance Bill 2026, citing the need for comprehensive economic simulations and revenue balancing.
“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 explained to the media, signaling the Treasury’s cautious approach.
However, President Ruto was unmoved by these fiscal concerns. At the National Prayer Breakfast, he recounted the exchange: “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.’ I told them, ‘Let’s do it. Let’s do it.’”
The President’s decision prioritizes immediate relief for struggling workers over Treasury’s revenue concerns. Currently, workers earning up to Sh24,000 pay PAYE at 10%. Under the new directive, both this group and those earning up to Sh30,000 will be completely exempt.
To offset the revenue loss, the government is exploring strategies to widen the personal income tax base. Additional proposals include lowering the 30% tax bracket to 25% for middle-income earners, which could provide relief across multiple income levels.
According to projections, affected workers will see net pay increases ranging from Sh731 to over Sh2,000 monthly, depending on their income levels. For many Kenyan families struggling with the rising cost of living, this additional income could make a significant difference.
The full story is available at https://nairobiwire.com/2026/05/ruto-paye-tax-relief-low-income-earners-sh30000-kenya-2026.html
This clash between the Presidency and Treasury highlights the difficult balancing act facing Kenya’s government: providing relief to citizens while maintaining fiscal sustainability.