CS John Mbadi Defends Ruto Policies Refuting Claims of Over-Taxation

Treasury Cabinet Secretary John Mbadi on Tuesday explained the workings around the Social Health Authority as he dismissed the notion that the government was overtaxing Kenyans.

Mbadi, who was present during the National Assembly mid-term retreat gave a detailed presentation on the state of the economy, breaking down the tax implications of a middle-income earner.

According to the CS, the introduction of the Housing Levy and Universal Health Care deductions were interpreted as over-taxation, which was not the case. Mbadi clarified that a Kenyan on a KSh60,000 payroll can only be deducted KSh2550 from the housing levy and Social Health Authority deductions.

“If you are earning Ksh 60,000, the additional taxes you pay are the Housing Levy at 1.5 per cent and SHA at 2.75 per cent. Combined, this amounts to 4.25 percent, which is Ksh 2, 550,” Mbadi stated.

Mbadi emphasized that without these two deductions, Kenyans would have continued to endure a 30% salary cut.

In the previous defunct National Hospital Insurance Fund (NHIF), a Kenyan earning KSh 60000 would be subjected to a KSh1,700 cut for health cover –  a figure which Mbadi believes was a hefty figure compared to the KSh1785 which the same salary is deducted for both SHA and affordable housing.

“When you remove that from the Ksh 1,785, you are only paying Ksh 85 more. Is that over-taxation?” Mbadi challenged lawmakers.

Mbadi’s remarks came amid growing concerns from Kenyans about the state of the economy and increasing deductions from their salaries.

More recently, Kenyans were dealt another reality after the National Social Security Fund (NSSF) announced a six per cent increment of contributions to an employee’s salary, matched in equal amounts by employers.

From February 1, minimum contributions are set to increase from Sh420 to Sh480 while high-income earners will pay as high as Sh4,320 from the previous Sh2,160.

As far as SHA is concerned, lawmakers have also expressed concerns about the new healthcare system, prompting Deputy President Kithure Kindiki to promise a review of the means-testing tool of the Social Health Authority (SHA).

The review of the system is to allow for the onboarding of Kenyans who are at the bottom of the pyramid-like mama mbogas and boda boda riders.