Taxing super-rich could net additional Sh130b, State told

IPF Chief Executive Daniel Ndirangu speaking during launch of the 2026 annual national shadow budget.[Wilberforce Okwiri,Standard]

Kenya could raise about Sh130 billion in additional revenue by strengthening taxation of wealth, the Institute of Public Finance (IPF) has said, as it called for reforms to address widening inequality and reduce pressure on ordinary taxpayers.

The institute says the country’s current tax system places a heavier burden on income earners while wealth accumulated through assets, shares, investments and other holdings remains comparatively undertaxed.

Speaking during the launch of a policy brief on  taxing wealth in Kenya, IPF Head of Programmes John Nyangi said the country was losing an opportunity to mobilise domestic resources from wealth held by a small section of the population.

“Imagine we have about 125 people who own more wealth than 43 million Kenyans. In this, we are discussing and seeing options on how we can reduce these inequalities,” Nyangi said.

He said Kenya’s economy has grown by an average of about five per cent over the past five years, but this growth has not been evenly distributed, with the institute citing estimates that seven million Kenyans have become poorer.

“The economy is growing, the wealth accumulation in Kenya is increasing, but instead of us seeing poverty reduction, we are seeing more people becoming poor when the economy is growing,” Nyangi said.

The IPF estimates that a fairer wealth taxation system could generate about $1 billion (Sh130 billion), equivalent to approximately Sh130 billion, which it says could be channelled into healthcare, education and social protection.

Nyangi said the additional revenue could help address shortages of medicines, diagnostic equipment and health workers while also improving education financing.

“We have hospitals where people go there, they can't get medicines, they can't get tests, they can't get MRI, they can't even get chemo,” he said.

The proposed reforms include reviewing capital gains tax to introduce rates that reflect the size of gains rather than applying the current 15 per cent rate uniformly.

Daniel Murakaru, a legal associate at the Kenya Women Parliamentary Association and former legal research fellow at IPF, said a proportionate system would ensure those making substantially larger gains contribute more.

“If in your transfer you're making a 200 million gain, then it shouldn't be taxed at the normal rate of 15 per cent in the same bracket of a person who is gaining, let's say, 30,000 shillings,” Murakaru said.

He also called for a review of proposed taxation of high-value motor vehicles, saying differentiated rates could be considered based on vehicle value.

The researchers further want greater transparency around wealth held through trusts and other structures, arguing that limited disclosure makes it difficult for the Kenya Revenue Authority to identify assets and their beneficial owners.

“It’s very difficult to say we can tax this wealth if we cannot see it,” Nyangi said, calling for stronger disclosure requirements.

He also questioned taxation and productivity of large land holdings, saying ownership of major assets should be more transparent.

Amnesty International researcher and adviser Riva Jalipa said taxation should be treated as a human rights issue because government revenue determines the resources available for essential services.

“Taxation is a human rights issue because it concerns where you're taking resources from but also how you're spending it,” Jalipa said.

The IPF policy brief also proposes increasing the Sh2,000 monthly Inua Jamii cash transfer to between Sh4,000 and Sh5,000, expanding access to healthcare and education, and extending maternity leave from three to six months.

Nyangi said the proposals require broader tax reforms rather than changes to a single law.

“We are talking about taxation reforms... supporting reforms in the whole taxation system in the country,” he said.

The institute has also developed a digital tax toolkit intended to provide policymakers, civil society and the media with practical guidance on wealth taxation and support evidence-based advocacy.