Safina Party deputy leader Willis Otieno has proposed a fundamental reform of Kenya’s tax system, advocating for the replacement of the current Value Added Tax (VAT) regime with a flat 5% sales tax.

In a statement issued on July 29, 2026, Otieno criticised the existing tax framework as overly complex, costly to administer, and burdensome for both households and businesses. He argued that the current VAT rate of 16% reduces disposable income, discourages investment, and increases production costs, thereby slowing economic growth.

Proposal Details and Rationale

Otieno’s proposal is part of Safina Party’s broader FIST Agenda, which aims to simplify taxation and enhance economic performance. The 5% sales tax, which forms the fourth pillar of this agenda, is intended to be easier to understand and comply with, while lowering costs for consumers and businesses alike.

  • Replace the existing 16% VAT with a 5% sales tax applied at the final point of sale
  • Reduce the tax burden on households to increase disposable income
  • Lower business costs to encourage investment and expansion
  • Broaden the tax base through increased economic activity and compliance

Otieno emphasised that this simplified tax system would reduce tax avoidance and make revenue collection more predictable. He also highlighted that economic growth should be driven by productive citizens and thriving enterprises rather than higher taxes.

Implications and Next Steps

While the proposal aims to tackle Kenya’s high cost of living and stimulate economic growth, it would require significant amendments to current tax laws and changes in revenue collection mechanisms. The statement did not specify an implementation timeline or address how the government would manage potential shortfalls from lowering the tax rate.

Safina Party’s FIST Agenda also calls for reforms in public debt management, government borrowing, and financing of key sectors such as healthcare and education, indicating a comprehensive approach to Kenya’s economic challenges ahead of the 2027 General Election.