TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting and offers profound insights into Kenyan and global economic trends.

President William Ruto's Cabinet has hinted at the introduction of new taxes in the 2025/2026 financial year.

In a statement on Tuesday, February 11, the Cabinet noted the broad-based government will focus on six priorities in the upcoming fiscal year, including expanding the tax base.

It explained that this will be achieved through strategic investments in key economic sectors, strengthening production and market access, and attracting local and foreign investments.

"To maintain economic momentum, the government has outlined six key priorities: reducing the cost of living, eradicating hunger, creating jobs, expanding the tax base, improving foreign exchange balances, and fostering inclusive growth.

"The government’s fiscal policy for 2025/26 prioritises fiscal consolidation to reduce debt vulnerability while ensuring adequate funding for essential public services. This will be achieved through expenditure rationalisation, revenue mobilisation, and enhanced tax compliance," part of the statement read.

The Cabinet approved the KSh 4.2 trillion 2025/26 Budget Policy Statement (BPS), which will now be forwarded to Parliament for debate.

It includes KSh 3.09 trillion for recurrent spending, KSh 725.1 billion for development, KSh 436.7 billion for county transfers, and KSh 5 billion for the Contingency Fund.

The Cabinet also approved the 2024/25 supplementary estimates allocating an additional KSh 344.8 billion for recurrent spending and development projects.

Further details on the proposed budget reveal a proposed shareable revenue of KSh 2.8 trillion under the Division of Revenue Bill 2025. This includes KSh 405.1 billion for county governments as their equitable share and KSh 10.6 billion for the Equalisation Fund.

Ruto's administration intends to borrow KSh 759.4 billion in the 2025/2026 financial year (FY) to plug the budget deficit.

The fiscal deficit will be financed by net external loans of KSh 213.7 billion (1.1% of GDP) and net domestic financing of KSh 545.8 billion (2.8% of GDP).

The government expects to collect KSh 3 trillion in ordinary revenue from taxes and levies.

Proofreading by Mercy Nyambura Guthua, journalist and copy editor at TUKO.co.ke

Source: TUKO.co.ke