Finance Bill 2025: VAT on All Products Could Push Millions Into Deeper Poverty

 


Nairobi, Kenya – One of the most far-reaching and alarming proposals in the Finance Bill 2025 is the removal of Value Added Tax (VAT) exemptions on essential goods. If passed, this change means that everything—from unga (maize flour) to sanitary pads, medicines, and textbooks—will now be taxed.

Currently, many basic items are either zero-rated or exempt from VAT to make them affordable for low-income households. But under the new plan, all products, regardless of their necessity, will attract the standard 16% VAT rate.

For families already struggling to make ends meet, this proposal feels like a direct attack on their survival. “How can they tax food and medicine when people are going hungry and hospitals have no drugs?” asks Mary Atieno, a single mother of four in Kisumu. “It’s like they want us to suffer.”

Analysts warn that this change could trigger a chain reaction in the economy. Prices of basic goods will rise across the board, increasing the cost of living for everyone—but hitting the poor the hardest. Small businesses, especially those selling fast-moving essential goods, will also feel the heat as customer demand falls due to higher prices.

Even health professionals are sounding the alarm. “Taxing medicines and sanitary pads is dangerous,” says Dr. Aisha Gichuhi, a pharmacist in Nakuru. “It will force people to cut back on health needs, and we’ll see more cases of preventable illnesses.”

The government argues that standardizing VAT will simplify tax administration and increase revenue, but critics say this is a lazy way to raise funds. “Instead of sealing corruption loopholes or taxing wealth, they are coming after the common mwananchi,” said activist Boniface Mwangi in a statement.

Civil society organizations and religious leaders are urging Parliament to reconsider. With food inflation already at historic highs, many fear this could be the final blow to vulnerable households.

The VAT change, though technical on paper, has very real consequences in kitchens, classrooms, and clinics across Kenya. It’s not just a tax reform—it’s a question of survival.

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