World Bank Backs New Tax Reforms to Steady Kenya’s Fragile Finances

The World Bank has advised Kenya to increase consumption taxes such as VAT and excise duty to help settle its growing supplier debts. According to the Bank’s Sub-Saharan Africa outlook, the government’s pending bills had reached KSh526 billion by June 2025, putting pressure on public finances.This recommendation comes barely a year after violent protests forced President William Ruto to drop earlier tax proposals worth KSh346 billion. The World Bank’s call now puts the government in a tight spot, as it struggles to balance between raising revenue and calming public anger over the high cost of living.Many Kenyans are already struggling with new taxes, including the housing levy and health insurance deductions. Since average real income has dropped for five straight years, and inflation continues to rise faster than salaries, adding more consumption taxes could worsen the situation.

Experts warn that this could fuel social tension as families lose even more of their spending power.Although the government has begun paying road sector debts using bonds, new unpaid bills keep piling up. The World Bank says its proposal is part of a wider economic reform plan that also suggests lowering corporate tax to attract investment.However, the push for higher consumer taxes while wages remain stagnant could deepen mistrust between citizens and the government. Economists fear that this strain may shape Kenya’s political and economic debates for years to come, especially if people feel the reforms only add to their financial burden.