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Treasury Cabinet Secretary John Mbadi has announced plans to reintroduce the proposed tax on second-hand clothes, commonly known as mitumba, after it was removed from the Finance Bill 2026 by the National Assembly.
Speaking while explaining the Bill’s proposals, Mbadi said the government intends to return the tax through amendments, arguing that the move is meant to simplify taxation in the mitumba sector by collecting the levy at importation.
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Under the proposal, five per cent of the customs value of imported second-hand clothes would be treated as profit and taxed at 30 per cent, resulting in an effective tax rate of 1.5 per cent.
Mbadi claimed the idea originated from traders in the mitumba business, adding that he still supports its return despite lawmakers dropping it from the Bill.
“This proposal came from mitumba traders themselves. Although it was removed, I still believe it should be reinstated through amendments,” he said.
The Treasury CS also rejected reports suggesting the Finance Bill introduces fresh taxes on mobile phones and bottled water, saying some sections of the Bill had been misrepresented to the public.
On Pay As You Earn (PAYE), Mbadi said the government is willing to lower the tax burden but warned that proposals such as exempting salaries up to Ksh30,000 from tax — up from the current Ksh24,000 threshold — could create a revenue shortfall of about Ksh35 billion.
He noted that Treasury could reconsider the proposal if reforms at the Kenya Revenue Authority improve revenue collection from personal income tax.
Mbadi also defended plans allowing KRA to automatically generate tax assessments using income data obtained from third parties, saying the self-assessment system alone is insufficient.
Treasury tax adviser Risper Simiyu said taxpayers would still have the right to dispute or appeal any assessments issued by the tax authority.
The CS further backed proposals allowing KRA to recover disputed taxes through agency notices even while court cases are ongoing, saying some taxpayers misuse legal processes to delay payments.
According to Treasury, the Finance Bill 2026 is designed to improve efficiency in tax administration rather than introduce additional tax burdens on Kenyans.
