A proposed tax regime targeting imported second-hand clothes has opened a fresh debate over whether the Finance Bill 2026 supports or burdens the informal traders, boda boda riders, mama mboga traders and low-income families who formed the heart of Kenya Kwanza’s hustler narrative.
Mitumba traders are facing fresh uncertainty after Treasury signalled plans to revive a proposed tax regime targeting imported second-hand clothes, worn footwear and other used articles.
The proposal has placed the Finance Bill 2026 at the centre of a broader political and economic debate: whether the government is simplifying taxation in the mitumba sector or adding pressure on the same low-income traders and households that President William Ruto’s administration promised to support under the hustler and bottom-up agenda.
The proposal, first contained in the draft Finance Bill 2026, sought to introduce a new Section 12H to the Income Tax Act, requiring tax to be paid on income derived from importing worn clothing, worn footwear and other worn articles classified under tariff heading 6309.
Under the proposal, taxable profit would be deemed to be five percent of the customs value of the imported goods, then taxed at 30 percent, translating to an effective final tax of 1.5 percent at the point of entry.
In practical terms, tax experts have described it as a presumptive tax regime targeting the mitumba sector. CM Advocates says the tax would be paid at importation and treated as a final tax on that income, with the taxable profit deemed at five percent of customs value.
Although the measure was reportedly omitted from the version of the Finance Bill 2026 submitted to the National Assembly, Treasury Cabinet Secretary John Mbadi said the government still supported the proposal and intended to reintroduce it through amendments.
“We proposed to have it,” Mbadi said, arguing that the measure was meant to simplify taxation in the second-hand clothing sector rather than increase the burden on traders.
According to the CS, the government’s argument is that mitumba traders currently operate under a complex tax environment involving charges at importation and later income tax obligations.
By collecting a final tax at the point of entry, Treasury says the system would become easier to administer and more predictable for traders.
But the proposal has raised concern among small-scale traders and consumers, especially over whether the cost will be absorbed by importers or passed down the supply chain.
The mitumba value chain does not end at the port. It runs through importers, wholesalers, bale buyers, market traders, hawkers, transporters, tailors and final consumers.
For many low-income families, mitumba is where parents buy school clothes, shoes, jackets, work wear and children’s clothes at prices they can afford.
That is why the proposed tax carries a wider cost-of-living implication. If importers pass the 1.5 percent final tax to wholesalers, and wholesalers pass it to market traders, the price increase could eventually reach ordinary consumers already struggling with food, rent, school fees and transport costs.
The debate also carries political weight because President Ruto’s rise to power was built partly on a hustler narrative that placed boda boda riders, mama mboga traders, small-scale farmers, unemployed youth and informal workers at the centre of Kenya Kwanza’s campaign message.
A 2026 political assessment noted that the Bottom-Up Economic Transformation Agenda promised to lift ordinary hustlers who felt excluded from an economy seen to favour politically connected elites.
That makes the proposed mitumba tax a test of whether the administration’s tax policy is aligned with its political promise to protect the lower end of the economy.
The government’s Bottom-Up Economic Transformation Agenda is officially framed around lowering the cost of living, creating jobs, expanding the tax base and promoting inclusive growth.
But for informal traders, the practical question is whether expanding the tax base will leave them with thinner margins and higher operating costs.
Supporters of the proposal argue that a predictable one-off tax could formalize the mitumba trade and reduce disputes with tax authorities.
The Mitumba Consortium Association of Kenya has supported a presumptive tax at importation, saying it would simplify tax administration and create a more predictable business environment for traders.
However, critics warn that any new cost imposed at the point of importation can easily move through the market and land on the final buyer. This is especially sensitive because mitumba already attracts other import-related taxes and levies, including import duty, VAT, Railway Development Levy and Import Declaration Fee.
For small traders in open-air markets, the concern is the cumulative burden. Many already pay county market fees, transport charges, storage costs, rent for stalls and daily operating costs. Any increase in bale prices could force them either to raise retail prices or accept lower profit margins.
The biggest impact may be felt by those at the lowest end of the chain: market women selling children’s clothes, hawkers buying small stock, boda boda riders purchasing jackets and shoes, students looking for affordable outfits and families that cannot afford new clothing.
The Finance Bill 2026 therefore places Parliament in a difficult position. On one hand, Treasury is under pressure to raise revenue and widen the tax base. On the other hand, the administration’s political brand was built around protecting hustlers and easing the burden on ordinary Kenyans.
As MPs consider possible amendments, mitumba traders will be watching whether the proposed tax returns to the Bill and whether lawmakers will demand safeguards to prevent double taxation, price shocks and additional pressure on informal livelihoods.
Comments (0)