Workers expecting lower PAYE deductions in their September salaries will have to wait longer after the Treasury postponed the next step in its tax reform plan to October.
Treasury Cabinet Secretary John Mbadi said public participation on the proposed PAYE changes will begin in the first week of October, despite an earlier commitment to have the reforms before Parliament by the end of September.
Mbadi said Treasury could not skip public participation because doing so would leave the proposed changes open to legal challenges. He said the government would first allow Kenyans to give their views before the proposals are turned into a Bill for consideration by Parliament.
"It is coming. I am going for public participation first. If I bring it without conducting public participation and someone goes to court, it will be quashed. Kenya has become what it is. Let us just live with it. Sometimes it can be very uncomfortable, but we decided to give ourselves that Constitution. Watch and hear the public participation," he said.
The CS attributed the change in schedule partly to the number of activities lined up for September, but said the process would start as soon as October begins.
"I will do it immediately. The problem is that this month is a bit crowded, but I guarantee you, in the first week of October, I am starting that exercise."
The exercise will run alongside Mbadi's international engagements, including the IMF and World Bank Annual Meetings set for October 12 to 18.
He said the government would continue working on the proposals before and after the meetings, with the aim of eventually introducing the legislation in the National Assembly.
"I will break it when I'm going for the Spring Meetings, the meeting of the IMF and World Bank. Then I come back and conclude it. Then we process the Bill, we take it to the National Assembly, and then they also do some public participation," he said.
The proposed reforms were expected to be contained in the Income Tax (Amendment) Bill II 2026 after the PAYE measures failed to make it into the Finance Act 2026.
Mbadi had previously said the Bill would be presented to Parliament before the end of September. The revised timeline means the Treasury will instead first go through public participation before completing the legislation.
The government had initially planned to introduce PAYE relief through the 2026 Finance Bill. However, the proposals were left out when the legislation was eventually enacted.
The omission raised questions about how the government would deliver the tax relief it had promised to workers.
The issue gained further attention after President William Ruto instructed the Treasury to come up with measures to lower PAYE deductions and increase the amount of money workers take home.
Under the proposed tax changes, employees earning less than Sh30,000 would be removed from the PAYE bracket and therefore exempted from the tax.
Workers earning below Sh50,000 would also benefit from a lower PAYE rate of 25 per cent under the proposals.
The government estimates that more than 3.4 million salaried workers could see their PAYE deductions reduced if Parliament approves the proposed changes.
Despite the latest delay, Mbadi insisted that the tax reforms remain on the government's agenda and will proceed after the required public participation process is completed.