By Benadeta Mwaura - Reporter
Kenya, 18 June 2026 - Few proposals in the Finance Bill 2026 have generated as much public debate as the government's plan to reform taxation on imported second-hand clothing, commonly known as mitumba.
For millions of Kenyans, mitumba is more than a fashion choice, it is an affordable source of clothing and a critical pillar of the informal economy. According to government estimates, the sector supports thousands of traders and provides livelihoods across major markets, including Gikomba in Nairobi, Kongowea in Mombasa and Kibuye in Kisumu.
As Parliament debates the Finance Bill 2026, confusion and misinformation have swirled around whether the government intends to introduce a new tax on second-hand clothes. Treasury officials insist that the proposal is not a fresh levy but rather a restructuring of the existing tax framework.
The initial proposal sought to introduce a deemed profit tax model for mitumba imports.
Under the plan, 5% of the customs value of imported second-hand clothing would automatically be treated as taxable income at the point of entry. This amount would then be subject to income tax, effectively creating a one-off payment system intended to replace multiple tax obligations currently faced by traders.
Treasury Cabinet Secretary John Mbadi said the proposal emerged after consultations with representatives from Nairobi's Gikomba market.
“This proposal actually came from people within that industry themselves. Leaders from Gikomba market came here and sat down with me together with my team,” Mbadi said.
According to the CS, traders argued that the existing system exposes them to multiple tax obligations and frequent compliance requirements.
“The idea was that instead of having many different taxes, there should be one single tax paid at the point of entry,” Mbadi explained. “When goods are imported, tax is paid there once, and traders are done with customs-related tax issues.”
Consumer groups, traders and industry stakeholders quickly raised concerns that the new framework could increase the cost of second-hand clothing, which remains the most affordable option for many low-income households.
Critics also questioned whether the simplified tax system would genuinely reduce costs or merely shift the burden to consumers.
The debate intensified online, with some claims suggesting that the government was introducing an entirely new "mitumba tax." However, government officials have repeatedly dismissed those claims as misleading.
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Government Spokesperson Isaac Mwaura stated:
“There is no tax on mitumba as has been alleged. Kenyans should focus on the official bill and submit their views through the public participation process.”
Amid growing criticism during public participation, the National Treasury signalled a possible rethink of the proposal.
National Assembly Finance and National Planning Committee Chairperson Kuria Kimani said mitumba traders had proposed retaining a simplified five per cent final tax model at importation to avoid multiple tax assessments and audits.
“But what they’re saying is that what will cushion them from KRA going to do audits on them is to have a five percent income tax rate that is final tax on imported goods,” Kimani said. “So at the point of entry they want to just pay five percent and that becomes a final tax rather than paying what they are paying now.”
Reports indicate that Treasury has since moved to withdraw the original proposal as discussions continue with traders and lawmakers.
The Finance Bill 2026 has already passed through the National Assembly and now awaits presidential assent before becoming law. However, some provisions could still be adjusted through amendments or regulations before implementation.
For mitumba traders and consumers, the key question remains whether any final tax framework will lower compliance costs without increasing the price of second-hand clothing.
The outcome could have significant implications for Kenya's informal economy, where affordability remains a major concern amid rising living costs and slowing household incomes.
For now, the government's message is that no new standalone tax on mitumba has been introduced. Instead, the ongoing debate centres on how best to simplify taxation for one of Kenya's largest informal sectors while protecting consumers from higher prices.