NAIROBI, Kenya, May 29 — The Finance Bill 2026 has reignited a familiar but increasingly uneasy national debate: how much more can the state extract from taxpayers before revenue mobilisation collides with economic reality.Presented as part of Treasury’s broader plan to fund government spending and narrow the fiscal deficit, the Bill seeks to raise about Sh120 billion in additional revenue. It comes at a time when households are grappling with persistent living costs, businesses are contending with weak consumer demand, and doubts persist over whether the Kenya Revenue Authority (KRA) will meet its current collection targets.The proposed changes—covering digital transactions, mobile phones, tax administration, data access, excise duties and VAT treatment of key goods—have triggered widespread criticism from economists, tax experts, business groups and consumers, many of whom argue the measures lean heavily toward revenue generation with limited short-term relief for households.KPMG Associate Director Kiema Onesmus said the Bill reflects the constraints of a tax-dependent fiscal model.“You cannot tax yourself to prosperity. The sad reality is that, as a country, that is where we seem to be heading because taxes remain our main source of revenue,” he said.“The challenge is that we appear to be left with two options: either taxing ourselves or borrowing, and we are reaching a point where we are milking the cow dry.”His remarks come as scrutiny intensifies over KRA’s revenue ambitions. The authority is targeting about Sh2.7 trillion in the 2025/26 financial year, rising to approximately Sh2.9 trillion in 2026/27—an increase of nearly Sh200 billion.Analysts say the jump raises questions about feasibility in an economy still weighed down by subdued private sector growth, declining purchasing power and elevated operating costs.“The bigger question is how achievable this is because we are not even certain KRA will meet the current target. Moving from Sh2.7 trillion to Sh2.9 trillion is a significant leap,” Onesmus said.“Unless policy shifts prioritise economic growth, the country could end up facing a deficit that forces familiar choices: more borrowing or spending cuts.”Among the most contested proposals is a 25 per cent excise duty on mobile phones. The government argues it would streamline existing taxes embedded in imported devices, potentially simplifying the tax regime.Treasury Cabinet Secretary John Mbadi has previously suggested the impact on prices may not be as severe as critics fear.However, analysts and technology sector observers warn the measure could increase the cost of devices central to Kenya’s digital economy.“Regardless of assurances about removing other taxes, some adjustments would require regional coordination under the East African framework,” Onesmus said. “As it stands, there is little in these proposals that cushions the ordinary Kenyan.”The Bill also proposes changes affecting electric vehicles and VAT classification. Products currently zero-rated would be reclassified as VAT-exempt—a shift tax experts say could have unintended consequences.“When a product becomes exempt from VAT, producers cannot reclaim input VAT,” Onesmus explained. “Businesses are unlikely to absorb those costs, meaning they will be passed on to consumers. Prices may therefore rise despite the perception of relief.”Digital payments—long regarded as one of Kenya’s economic success stories—are also under scrutiny, with proposed changes to transaction charges reigniting concerns about the future of cashless systems.Kenya has been globally recognised for mobile money adoption, but tax experts warn that additional levies could undermine financial inclusion.“People pay bus fares, shop, tip workers and settle bills digitally,” Onesmus said. “Taxing transaction charges risks reversing gains by discouraging digital payments and pushing users back into cash-based activity.”Another contentious proposal would expand the tax commissioner’s access to taxpayer financial data. Supporters say it would improve compliance and curb evasion, but critics warn it risks overreach.“While taxpayers already operate under a self-assessment system, extending access raises questions about boundaries,” Onesmus said. “Not every transaction reflects taxable income.”The Bill also revives debate around the Kenya Revenue Authority’s Electronic Tax Invoice Management System (eTIMS), a key pillar of tax digitisation. While intended to improve transparency, practitioners cite persistent concerns over data mismatches and administrative strain.“Taxpayers are increasingly seeing discrepancies between their records and KRA’s pre-populated figures,” Onesmus said. “Resolving those gaps takes time and increases compliance pressure.”Informal sector operators and small-scale farmers may be particularly affected, analysts warn, given challenges in documenting cash-based transactions and input costs.“A farmer may incur genuine expenses but lack formal records,” Onesmus said. “Without documentation, there is a risk that gross income is treated as taxable profit.”Beyond technical provisions, the Bill has reopened a broader question of public trust. Economists argue that willingness to pay taxes is closely tied to visible public service delivery and economic conditions.“Kenyans would feel less burdened if they could clearly see value for money—better roads, improved services and a stable cost of living,” Onesmus said.“But when disposable incomes are shrinking and living costs remain high, taxpayers begin questioning whether revenues are being used as intended.”As Parliament prepares to debate the Bill, lawmakers face competing pressures: Treasury’s urgent need for revenue, demands for fiscal discipline, calls for growth stimulus, and growing taxpayer fatigue.The central question remains whether the government’s push for higher revenues will strengthen fiscal stability or deepen concerns that taxation is outpacing the economy’s capacity to absorb it.