President William Ruto on Thursday defended his administration’s controversial tax proposals, assuring Kenyans that the Finance Bill 2025 will ease the burden on workers and help local businesses thrive.
Speaking at Uhuru Gardens during Labour Day celebrations, Mr. Ruto said the new measures — approved by Cabinet earlier this week — are intended to “stimulate economic growth, deliver efficiency, enhance competitiveness, and expand opportunity.”
“It’s not just about collecting revenue,” he said. “The Bill offers targeted relief to businesses and workers. It’s designed to support the spirit of enterprise and productivity.”
PAYE Relief to Be Applied at Payroll Level
Among the changes the President highlighted was a plan to adjust how Pay As You Earn (PAYE) taxes are calculated. Under the proposed law, employers will be able to apply tax exemptions and reliefs directly on the payroll — a shift from the current system that requires workers to wait until they file annual tax returns.
“This will increase efficiency and immediately benefit employees,” Mr. Ruto told the crowd, drawing cheers from some sections and sceptical silence from others.
Critics have pointed out that while the reforms sound promising, recent months have seen workers’ pay slips shrink due to the introduction of mandatory deductions for housing, health, and pensions.
ILO Conventions to Be Ratified
The President also committed to strengthening workers’ rights. He announced that Kenya will ratify two key International Labour Organisation conventions by next year.
Convention 189 seeks to protect domestic workers’ rights, while Convention 190 addresses violence and harassment at the workplace.
“These international standards will help us uphold dignity for all workers, no matter their role or status,” he said.
Defending Deductions for Social Services
Mr. Ruto also defended deductions introduced under the affordable housing plan, the new Social Health Insurance Fund, and the National Social Security Fund, all of which have sparked backlash over reduced take-home pay.
“I ask Kenyans to look at the long-term value,” he said. “These programmes are about securing your future — housing, healthcare, and retirement.”
However, unions and opposition politicians argue that the rising cost of living and increased deductions are stretching households too thin. COTU Secretary General Francis Atwoli has called for all statutory deductions to be based strictly on basic salary, not gross pay, warning that overtime and allowances are being unfairly taxed.
The Finance Bill 2025 is expected to be tabled in Parliament later this month. Public hearings are likely to follow — and with them, fierce debate over who benefits and who bears the cost.
