John Mbadi, once a fierce critic of William Ruto, is now the President’s right-hand man defending his policies both in private and in public.
Before he was poached from the opposition and made the National Treasury Cabinet secretary in August last year, Mr Mbadi did not spare Kenya Kwanza’s economic policies that he believed were bad for Kenya.
When Dr Ruto came up with the affordable housing plan and the reformation of the health sector to create Social Health Authority (SHA), with an added tax burden on the taxpayer, Mr Mbadi shot them down, saying they would make Kenyans poorer.
At some point, he accused the government of extortion as it forced the housing levy and the SHA deductions.
But at a meeting with MPs on Monday, Mr Mbadi did not shy away from saying that as a Cabinet secretary in the government, he has no choice but to defend the government, despite having trashed the Kenya Kwanza policies from the opposition benches.
Kenya's economy is rising - John Mbadi, CS Treasury
“I am not in the opposition. I am at the centre of government. I am the minister for Finance. So, how do you expect me again to start talking about the negatives? It's not possible,” he said.
The housing levy imposes 1.5 per cent on Kenyans' monthly incomes towards the construction of 200,000 affordable housing units yearly.
SHA attracts a deduction of 2.75 per cent on the gross income of those in formal employment to finance the affordable healthcare plan.
Never mind that Mr Mbadi had accused the government of extortion in its bid to get its way on the housing levy and SHA deductions.
“This House must rise to the occasion and stop the government of Kenya from extorting employed Kenyans because this is extortion. We are having a government that is turning itself into an extortionist,” he said while in the opposition.
“You cannot force Kenyans to pay money to provide houses when they have not asked you that they need them.”
“I have to talk about the positives. And by the way, can I just give you an example? You know, there is this thing of saying that we are overtaxing. I have looked at the taxes because I was trying to see how I can make the pay slips better.”
We have actually improved people's payslips – John Mbadi, CS Treasury
In a document to the House, Mr Mbadi defended Dr Ruto’s revenue-raising policies, noting that claims of overtaxation were a misleading tale, despite the opposition and civil society pushing against punitive taxes.
Specifically, he defended the introduction of the housing levy to finance the affordable housing programme and the Social Health Authority (SHA), saying they are not a bad idea, only that they have been misrepresented as excessive taxation “when it is actually helpful to Kenyans”.
“If you are earning Sh60,000 a month, the additional taxes you pay are the housing levy calculated at 1.5 per cent and SHA at 2.75 per cent of the gross pay. The two combined amounts to 4.25 per cent, which is Sh2,550,” Mr Mbadi said.
According to the CS, “Without these deductions, individuals would have surrendered at least 30 per cent of their income to other taxes.”
“With the new tax changes, the 30 per cent is retained, and the only loss is 70 per cent of the Sh2,550, which translates into Sh1,785.”
But on February 15 last year, Mr Mbadi was captured in the Hansard of the National Assembly dismissing the housing programme.
CS John Mbadi to middle class: Give me one year, I'll put more money in your pockets
“This is the problem of stealing other people’s ideas and implementing them wrongly,” Mr Mbadi spoke on the floor of the House, as he accused Kenya Kwanza of stealing the Azimio manifesto ahead of the August 9, 2022 General Election.
“This is not what we intended or envisaged in our plan to provide affordable housing. Kenya Kwanza is lacking in creativity,” said Mr Mbadi, referring to Article 43 of the Constitution on the right to decent housing.
Mbadi the MP then argued that the idea behind “this Article was not for the government of Kenya to provide houses” to Kenyans.
“If that was the objective, how do you start taxing or levying fees on Kenyans today to provide houses, yet this Article talks about other things? One of them is that Kenyans should be free from hunger, and have adequate food of acceptable quality.
“Are you telling us that tomorrow after this levy, we should expect another levy to provide food to Kenyans, and others to provide safe and clean water and social security to Kenyans? That is not the way to do it,” he said.
MP John Mbadi slams DP Ruto over his statements on the cost of living
However, Dr Ruto was determined to have his way, with Mr Mbadi accusing him of failing to listen to the concerns of Kenyans, specifically on the Finance Bill, 2024, which he termed punitive.
“What Kenyans are witnessing and staring at is dictatorship. President Ruto does not care about the needs of Kenyans as long as it is his interests being served,” said Mr Mbadi after the House adopted a report of the Finance and National Planning Committee on the Finance Bill, 2024.
By February 14, Mr Mbadi will be presenting to Parliament a Budget Policy Statement (BPS) outlining the government’s expenditure plans for 2025–26.
Against a depressed revenue collection by the government, specifically in the previous two financial years, the BPS will project how much the government intends to borrow from the local and international markets. However, an elaborate taxation regime to finance the budget will be contained in the Finance Bill, 2025.
Mr Mbadi is known for, among other things, exposing the government’s plan to increase the road maintenance levy (RML) chargeable on petrol and diesel from Sh18 a litre to Sh25.
Mbadi: Kenyans are earning less today but not as exaggerated as being reported
Although the government would go ahead to increase the RML, its implementation was halted by the courts. Mr Mbadi’s comments come as public discontent over the high cost of living largely brought about by increased taxation continues to grow.
Wiper chief Kalonzo Musyoka, among other leaders, has accused the Kenya Kwanza administration of being insensitive in the imposition of taxes on the already overburdened people. However, Mr Mbadi noted that taxes imposed under SHA and the Housing Levy are not as punitive as a majority would want them to appear.
The CS compared the current deductions to the previous regime under the National Hospital Insurance Fund that replaced SHA, noting that someone earning Sh60,000 previously paid Sh1,700 monthly.
“When you remove that from the current deduction of Sh1,785 for someone earning Sh60,000 a month, you are only paying Sh85 more. Is that overtaxation?”
According to the minister, the tale of over taxation has been exaggerated. He implored Kenyans to look at the numbers objectively.
“Those of us in government will now expose this narrative so that people can understand that it is not as bad as it is being portrayed,” he said.
The government is hitting on all the cylinders to raise revenue to fund its development agenda that includes the construction of 200,000 affordable housing units for low-income Kenyans.
But the opposition and some economists have argued that the cumulative effect of these levies, coupled with rising inflation, is squeezing disposable incomes and hurting economic growth.
