House Team Retreats to Draft Report On Finance Bill 2026 After Stakeholder Hearings

The National Assembly's Departmental Committee on Finance and National Planning has concluded extensive public and stakeholder hearings on the Finance Bill 2026 and has retreated to draft its comprehensive report. This critical phase follows widespread public participation, a constitutional imperative in Kenya, and aims to reconcile diverse concerns raised by citizens, civil society, and the private sector with the government's fiscal objectives. The report will significantly influence the final form of the Bill, which proposes substantial changes to Kenya's tax regime, impacting various sectors and individual taxpayers. Legal professionals must closely monitor the committee's recommendations and the subsequent parliamentary debate to advise clients effectively on the evolving tax landscape and potential legal challenges.

The legislative journey of Kenya's Finance Bill 2026 has reached a pivotal stage, with the National Assembly's Departmental Committee on Finance and National Planning now in retreat to compile its report following weeks of intensive public and stakeholder engagements. This development marks the culmination of a constitutionally mandated process of public participation, which saw the committee traverse various counties to gather views from a broad spectrum of Kenyans. The Bill, a crucial instrument for the government's fiscal policy, is designed to generate revenue for the upcoming financial year, fund public services, and support development programs.

The committee's task is to synthesize the myriad submissions received, balancing the government's revenue generation targets with the economic realities and concerns articulated by citizens and various interest groups. The outcome of this report will directly shape the final version of the Finance Bill 2026, which proposes significant amendments to existing tax laws, including changes to income tax, value-added tax, and excise duty. For legal practitioners, this phase is critical, as the committee's recommendations will provide the clearest indication yet of the likely tax reforms and their potential implications for businesses and individuals across the country.

The framework for public finance and legislative processes in Kenya is deeply rooted in the Constitution of Kenya, 2010, particularly Articles 10, 118, and 201. Article 10 enshrines public participation as a national value and principle of governance, while Article 118 explicitly mandates Parliament to facilitate public involvement in its legislative and other business. Furthermore, Article 201 outlines the principles of public finance, emphasizing openness, accountability, and public participation in financial matters, alongside promoting an equitable society through fair taxation and prudent use of public money.

These constitutional provisions are operationalized through statutes such as the Public Finance Management Act, 2012 (PFM Act), which provides for the effective management of public finances by both national and county governments, and outlines opportunities for citizen participation in the budget process. The National Assembly's Departmental Committee on Finance and National Planning plays a central role in this process, mandated by Standing Order 216(5) to investigate, inquire into, and report on all matters relating to public finance, including reviewing legislation like the Finance Bill. The committee's public hearings are a crucial mechanism for fulfilling the constitutional requirement for public participation.

The current scrutiny of the Finance Bill 2026 also comes against a backdrop of heightened public awareness and engagement, significantly influenced by the widespread youth-led protests against the Finance Bill 2024. These past events underscored the critical importance of meaningful public participation and reshaped the national debate over taxation and economic policy, placing immense pressure on lawmakers to genuinely consider public concerns in the current legislative cycle.

The Departmental Committee on Finance and National Planning undertook an extensive public participation exercise, conducting nationwide hearings across 13 counties and receiving thousands of oral and written submissions from diverse stakeholders, including religious organizations, business associations, professional bodies, and civil society groups. This robust engagement reflects the constitutional imperative for public involvement, which Kenyan courts have consistently upheld as a cornerstone of legitimate legislation. Landmark rulings, such as *British American Tobacco Kenya, PLC v Cabinet Secretary for the Ministry of Health and Others* [2019] eKLR, have emphasized that public participation must be genuine and substantial, not merely a procedural formality. Courts have even struck down legislation, including the Finance Act 2023 and the Privatisation Act 2023, for failing to meet the threshold of meaningful public participation, underscoring the legal risks associated with inadequate consultation.

Key contentious provisions within the Finance Bill 2026 that drew significant public feedback include proposals to tax imported mobile phones at the point of activation, review Pay As You Earn (PAYE) tax bands, mandate the use of electronic tax invoices (eTIMS) for expense claims, introduce taxation of betting winnings, and impose Value Added Tax (VAT) on digital financial transactions. Stakeholders, such as the National Council of Churches of Kenya (NCCK) and the Anglican Church of Kenya (ACK), voiced concerns that some proposed measures could exacerbate economic hardships for households and businesses, advocating for a balance between fiscal responsibility and the protection of vulnerable citizens, as well as prioritizing economic expansion over increased taxation.

During the hearings, the National Treasury defended the Bill, projecting an additional KSh98 billion in revenue, with KSh36.3 billion expected from enforcement measures under the Tax Procedures Act. However, committee members stressed the need for a predictable tax environment to foster investor confidence. The committee's retreat to draft its report is crucial, as it must now reconcile these competing interests. The report will contain recommendations that aim to strike a balance between the concerns raised during public participation and the government's policy objectives. The legal weight of this report is substantial, as it will inform the final version of the Bill debated and voted on by the National Assembly, and any perceived failure to genuinely incorporate public input could lay the groundwork for future legal challenges based on deficiencies in public participation.

The Departmental Committee on Finance and National Planning's retreat to draft its report on the Finance Bill 2026 marks a critical juncture in Kenya's fiscal legislative calendar. The report, once tabled, will reveal the extent to which public concerns have been integrated into the proposed tax measures, setting the stage for intense parliamentary debate and potential amendments. The outcome will not only shape the country's economic trajectory for the upcoming financial year but also serve as a barometer for the efficacy of public participation in Kenya's democratic governance.

For legal practitioners, the period immediately following the report's tabling and the subsequent parliamentary proceedings will be crucial. Attorneys must meticulously analyze the final version of the Bill, advising clients on the specific tax implications, compliance requirements, and potential avenues for legal challenge, particularly concerning the adequacy of public participation. Staying abreast of these developments is paramount to proactively guide businesses and individuals through the evolving regulatory landscape and ensure adherence to the new fiscal regime. The ongoing emphasis by Kenyan courts on meaningful public engagement underscores the necessity for all stakeholders to remain vigilant and prepared for the final enactment of the Finance Bill 2026.