- President Ruto’s Cabinet has approved plans to trim the Ksh4.3 trillion draft budget for the 2025/26 financial year.
- The move is aimed at curbing rising public debt and instilling fiscal discipline across ministries.
- Ministries have been directed to work with the National Treasury to align spending with revised targets.
- The government targets a fiscal deficit of no more than 4.5% of GDP, down from previous years.
- The Finance Bill 2025 focuses on boosting tax collection efficiency rather than introducing new levies.
- The Bill also proposes fast-tracked tax relief for small businesses through quicker expense deductions.
The government has announced that it will review and reduce the proposed Ksh4.3 trillion budget for the upcoming 2025/26 financial year.
This follows a Cabinet resolution reached on Tuesday, April 29, during a meeting chaired by President William Ruto.
According to a statement from State House, the adjustments are meant to enforce spending discipline and ensure the country starts to live within its financial means.
Ministries Told to Adjust Expenditures
To align with the new budget direction, ministries and state agencies have been instructed to reassess their spending plans and eliminate unnecessary costs.
This process will be undertaken in close coordination with the National Treasury.
The government is now aiming to lower the fiscal deficit to 4.5% of GDP in 2025/26—a drop from 5.3% in 2023/24 and 5.1% in 2024/25.
In the long term, the administration is working towards shrinking the gap further to 2.7%, according to medium-term projections.
No New Taxes, Just Better Enforcement
The Cabinet also approved the Finance Bill 2025, which focuses more on tightening revenue collection systems rather than burdening Kenyans with additional taxes.
The Bill proposes a complete overhaul of current tax administration laws, including changes to the Income Tax Act, VAT Act, Excise Duty Act, and the Tax Procedures Act.
Among the key proposals is the closure of loopholes that have been used to manipulate tax refund claims, which have historically cost the country billions.
By streamlining systems, the government hopes to cut down on legal delays, reduce disputes, and boost overall tax efficiency.
Small Businesses Set to Benefit
In a move aimed at easing the pressure on micro and small enterprises, the proposed law introduces a faster method for claiming tax relief.
If passed, it would allow business owners to instantly deduct the full cost of work tools and essential equipment in the year of purchase.
This change is expected to speed up capital recovery for small businesses and reduce compliance bottlenecks.
