(Nairobi) – Introducing a wealth tax targeting Kenya’s wealthiest individuals could generate up to KSh 100.75 billion ($781 million) annually, according to a new report by the National Taxpayers Association (NTA). This revenue represents nearly one-third of the amount sought in the recently rejected Finance Bill 2024.
The report, titled “Taxing Wealth in Kenya,” proposes dividing Kenya’s 7,800 high-net-worth individuals (HNWIs), as identified in the latest Africa Wealth Report, into three tax brackets. Each bracket would be taxed based on their total wealth.
A proposed 1.5% annual wealth tax on individuals worth $1 to $3 million (KSh 140 million to KSh 400 million) could raise $171 million (KSh 22 billion) from an estimated 5,700 individuals. A 3% wealth tax on those worth $3 million to $100 million could yield approximately $450 million (KSh 58 billion). The wealthiest group, comprising 16 individuals with over $100 million each, would pay a 5% tax, contributing an estimated $160 million (KSh 20.6 billion).
Breakdown of Potential Revenue from Wealth Tax
| Wealth Bracket | Tax Rate | No. of Individuals | Potential Revenue (KSh) | Potential Revenue (USD) |
|---|---|---|---|---|
| $1–$3 million (KSh 140M–400M) | 1.5% | 5,700 | 22 billion | 171 million |
| $3–$100 million (KSh 400M–14.2B) | 3% | 2,084 | 58 billion | 450 million |
| Over $100 million (KSh 14.2B+) | 5% | 16 | 20.6 billion | 160 million |
| Total | — | 7,800 | 100.75 billion | 781 million |
The NTA report argues that this approach would alleviate the tax burden on low-income Kenyans, who are disproportionately taxed under the current system. According to the World Inequality Database (2022), the top 10% of Kenyans own 61.9% of the country’s net personal wealth, highlighting the significant gap between the rich and the poor.
The proposed wealth tax would require comprehensive measures, including robust legislation, clear definitions of taxable wealth, and enhanced data collection to identify high-net-worth individuals. The NTA recommends starting with a gradual approach, focusing initially on strengthening existing tax frameworks for property, financial assets, and intellectual property before implementing a full wealth tax.
Capital Gains Tax (CGT) was also emphasized as a critical tool in taxing wealth accumulation. While categorized as an income tax, CGT fundamentally targets increases in wealth over time and could complement broader wealth tax policies.
The report cites examples from countries like Argentina, Burundi, Colombia, and Uruguay, where wealth taxes have been used successfully to reduce poverty and address inequality. The NTA urges the Kenyan government to adopt similar strategies to close the wealth gap and align with global momentum for wealth taxation.
Kenya’s current tax system has criticized for favoring the wealthy. Salaried workers pay up to 40% of their income to the government, while the rich contribute only a small fraction of their wealth. The NTA asserts that a fair tax system, anchored in Article 201 of Kenya’s 2010 Constitution, would ensure equitable contributions from all income groups.