Treasury Cabinet Secretary John Mbadi has explained why the government may not fulfil the promise to do away with tax for Kenyans earning up to Ksh30,000 and reduce pay-as-you-earn (PAYE) tax.

Speaking on Monday, May 11, CS Mbadi explained that the move would create a Ksh30 billion hole in the budget if implemented.

He disclosed that the Treasury would tap into personal income tax and rental income tax to raise more revenue, which should then open up room to lower the PAYE.

“If the reforms bear fruit, we will collect much more from personal income tax, which will compensate for this. The other area is the rental income tax.

“Those are the things we are working on, but that will not stop us from implementing or actualising the proposal that we announced publicly,” he stated.

Mbadi further divulged that the government is forced to heavily tax low-earning Kenyans because of rampant tax evasion by high-income-earning Kenyans.

He explained that the  Kenya Revenue Authority (KRA) sought access to Kenyans’ financial data to clamp down on billionaires underpaying or deliberately refusing to pay taxes.

“We would have even reduced PAYE so that people pay less, but because we have people who earn money but do not want to pay taxes, taxpayers bear a lot of the burden,” the CS stated.

Mbadi urged Kenyans to rally behind the push to access personal data, and promised that the access would be limited to only financial data.

The CS explained that KRA would only charge tax on income earned and not any other money in their mobile money wallets or bank accounts.

“If I have a bank account which has huge transactions that cannot be explained, can I pay taxes on it at the very least? KRA should get the data and ask me if it is my income.

“It is for me to explain, for example, that the money has been sent to me by my aunt, or boyfriend, or girlfriend, and it is not income. B,” he stated.

The Treasury boss added that the government would not go after money on M-Pesa amid concerns raised by Kenyans.

“M-Pesa is not an income; it is a transfer of funds. Nobody will come for that,” he reassured.

Mbadi stated in his parting shot that financial data is part of public records and that KRA should be allowed access to it.

He claimed that those opposed to the access of financial data were money launderers who did not want to be questioned on their sources of income.