The government’s proposed move to impose value added tax (VAT) on a range of essential healthcare supplies threatens to dampen President William Ruto’s promise of providing universal, affordable healthcare, analysts have said.
In the planned amendments to the country’s tax laws through the Finance Bill 2025, the National Treasury has proposed to impose a 16 percent VAT on smartcards used to access healthcare services, weighing machinery used in hospitals and on a section of select food supplements.
These items were previously exempt from VAT as they are considered essential public goods.
“Some of the supplies that are proposed to be subject to VAT relate to the healthcare sector. The proposal therefore contradicts the government’s stated objective of making healthcare affordable for all,” analysts at legal firm Bowmans have stated.
The proposal to impose the tax comes at a time latest data from the Kenya National Bureau of Statistics (KNBS) shows that healthcare costs in the country increased by 3.3 percent between January 2024 to January this year, with a 0.4 percent rise between last December and January this year.
The increase in medical costs was reflected in the Consumer Price Index (CPI), which tracks changes in the cost of goods and services.
The increased taxes also come at a time when Kenya is navigating hurdles in the transition from the defunct National Health Insurance Fund (NHIF) to the Social Health Authority (SHA).
Delays in implementation, funding concerns and uncertainty among healthcare providers have left citizens jittery about the affordability of medical services.
The government-led shift to SHA was part of President Ruto’s much-touted and equally ambitious Universal Health Coverage (UHC) programme, which aims to ensure access to quality and affordable health services for all.
Although SHA was designed to improve efficiency and extend coverage, gaps in implementation have led to confusion and fears that costs will continue to rise, further straining household budgets.
