'Phone is not a luxury': Former LSK boss faults tax proposals

Former Law Society of Kenya (LSK) president Faith Odhiambo has launched a blistering attack on the Finance Bill 2026, warning that a proposed 25 per cent excise duty on mobile phones amounts to taxing a necessity, not a luxury, in a country where millions depend on handsets for banking, work and government services.

“I cannot in good conscience describe this as equitable,” Odhiambo said in a detailed analysis of the Bill, which was gazetted on April 30 and is now before Parliament. The government intends to raise Sh3.63 trillion in revenue for the 2026/27 financial year, with the budget deficit projected to widen to 5.3 per cent of GDP from 4.7 per cent.

The most controversial measure is a 25 per cent excise duty on telephones for cellular and wireless networks, payable not at import or purchase but at the point of activation — the moment a user inserts a SIM card and turns on the device. For a smartphone costing Sh15,000, the tax adds Sh3,750. A basic feature phone, still used by millions for M‑Pesa and SMS, would also become significantly more expensive.

“A phone is not a luxury. It is the primary tool for banking, communication, business and access to government services,” Odhiambo said, describing the measure as punitive in a country where mobile phones are central to daily life.

The Ruto government argues the tax is part of a strategy to broaden the tax base and tap into the fast‑growing digital economy without increasing Pay As You Earn (PAYE). But Odhiambo noted that many salaried Kenyans had expected relief through a restructuring of PAYE tax bands — a proposal that is absent from the Bill.

“That is not a minor omission. An explanation is owed to every employed Kenyan who was waiting for it,” she said.

Beyond phones, Odhiambo raised alarm over a series of other measures that she said would increase the financial burden on households and small businesses.

Odhiambo raised alarm over a series of other measures that she said would increase the financial burden on households and small businesses.

The Bill removes VAT exemptions on money transfers and payment processing services, and expands the definition of “royalty” to include fees paid to digital platforms, payment networks, card schemes and clearing systems — effectively bringing interchange and merchant service charges into the tax net.