A lobby wants court to halt several provisions of the Finance Bill 2026, arguing that Parliament is poised to approve measures that could raise consumer costs, expand tax enforcement powers and expose sensitive financial data without adequate constitutional safeguards.
The Consumers Federation of Kenya (Cofek) has moved to the High Court seeking to halt several provisions of the Bill, arguing that some of the proposed measures could increase household expenses, weaken taxpayer protections and expose citizens' financial information without adequate safeguards.
The petition, filed before the Constitutional and Human Rights Division, asks judges to suspend implementation of the contested provisions if Parliament passes them into law.
It says the cost of everyday purchases to digital transaction charges and taxes paid by informal traders could sharply rise if the tax proposals in the Bill are assented to law.
At the centre of Cofek’s case is the argument that the proposed changes extend beyond technical tax amendments and could directly affect how Kenyans earn, spend and save money.
One of the federation's biggest concerns is the proposed removal of VAT exemptions and zero-rated treatment on selected goods and services. Zero-rated supplies will be converted to 16 per cent VAT.
According to the lobby, removing those protections could raise production and distribution costs for businesses, which would eventually be passed on to consumers through higher prices.
The affected goods include basic foodstuffs, health products, agricultural inputs, and educational materials. Cofek says consumers could immediately face higher prices.
"The Finance Bill does not disclose any compensatory mechanism, transitional framework or consumer protection measures intended to mitigate the impact of the proposed amendments," the organisation said in court papers.
It says Parliament is removing existing VAT protections without adequately disclosing which essential goods will become more expensive or assessing the impact on consumers.
For households already grappling with the rising cost of living, the lobby argues that the proposals could make everyday goods and services more expensive.
The lobby is asking the court to require greater transparency before the Bill becomes law and has proposed a 12-month transition period together with the restoration of zero-rating for deleted categories involving basic foods, health products, agricultural inputs and educational materials.
The petition also highlights a proposal to impose a 1.5 per cent withholding tax on gross proceeds from scrap metal transactions.
While the measure appears targeted at a specific sector, Cofek says it disproportionately affects low-income Kenyans who survive on collecting and selling scrap metal.
The federation notes that the trade is dominated by youth groups, waste pickers, small-scale dealers and informal workers whose businesses operate on thin profit margins.
"Taxation imposed upon gross transaction values without regard to actual income or profitability raises substantial constitutional questions concerning fairness, proportionality and equitable sharing of the tax burden," the organisation says.
Another area of concern involves digital payments. The petition challenges provisions expanding the definitions of royalty and management fees to cover elements of digital financial infrastructure, including payment processing systems and card schemes.
The lobby argues that the practical effect could be higher operating costs for payment processors and financial institutions.
Those costs, it says, may ultimately be transferred to consumers through increased transaction fees, merchant charges and other costs associated with digital payments.
"The practical effect of the proposed amendment is likely to increase the operational costs borne by financial institutions, payment processors and service providers operating within Kenya's digital financial ecosystem," the federation said.
The petition also challenges new rules requiring virtual asset providers to share information about users and their transactions with KRA.
The federation argues that the proposals could expose Kenyans' financial data to local and foreign tax authorities without clear safeguards on how the information would be used, stored or protected.
Cofek argues that the proposals lack clear safeguards on how personal financial information would be retained, protected and used.
"The proposed framework raises substantial constitutional questions concerning privacy, informational autonomy and compliance with the Data Protection Act," it said.
Cofek says a proposed General Anti-Avoidance Rule and new best-judgment assessment powers could allow the Commissioner-General to impose tax liabilities without sufficient procedural safeguards, including prior notice and opportunities to be heard.
"The proposed amendment raises substantial constitutional questions concerning procedural fairness, reasonableness and the constitutional guarantees protected under Article 47," the organisation said.
The federation also objects to proposed changes affecting East African Community trade arrangements, arguing that removing preferential treatment for qualifying goods from partner states could increase supply-chain costs and eventually raise prices paid by consumers.
Cofek's concern is that deleting Rules-of-Origin exclusions for East African Community partner states may erode preferential treatment, potentially increasing costs along supply chains and ultimately for consumers.
It argues that ending EAC preferential treatment risks higher prices and supply disruptions and consumers could pay more as regional import advantages disappear.
Beyond the individual clauses, Cofek argues that Kenyans were not given sufficient information to understand the full implications of the proposals during public participation.
It says meaningful public engagement requires citizens to know not only what Parliament intends to change, but how those changes could affect their daily lives.
The organisation wants the court to suspend implementation of the contested provisions pending determination of the case and allow the petition to continue as a challenge to the Finance Act if the Bill becomes law before judgment.
The Treasury, Kenya Revenue Authority, Parliament and the Attorney General had not responded to the allegations contained in the petition at the time of filing.
