Higher taxes for Kenya’s rich can lower extreme inequality – Oxfam

Extreme inequality is out of control in Kenya. Less than 0.1% of the population (8,300 people) own more wealth than the bottom 99.9% (more than 44 million people). Tackling inequality could help to lift millions out of poverty, secure sustainable economic growth and bring the country together.

A recent report by Oxfam argues that if Kenya increased its tax-to-GDP ratio by 3 percentage points in 2014 it could have raised enough additional funds to ensure quality healthcare for all Kenyans. By delivering on a five-point action plan by Oxfam to tax and spend effectively, the government would ensure a more equal and prosperous future for all Kenyans.

Despite the country posting tremendous growth figures of the last few years, the benefits are not being shared equally. The number of super-rich in Kenya is one of the fastest growing in the world. It is predicted that the number of millionaires in Kenya will grow by 80% over the next 10 years. In a decade, Kenya is forecast to rank third only to South Africa and Egypt for playing host to the highest number of super-rich on the African continent.

However, while a minority of super-rich Kenyans are accumulating wealth and income, the fruits of economic growth are failing to trickle down to the poorest.

In 2014, 40% of Kenyans – or approximately 19 million people – were categorized as poor in the Multidimensional Poverty Index, and 13% – approximately 6 million people – were categorized as ‘destitute’.

There are also wide regional disparities. For example, in Nairobi, average household monthly expenditure is Kenya Shillings 7,200 per adult equivalent, while in Wajir and Turkana, it is Kenya Shillings 1,440.

Kenya is ranked 94th out of 152 countries in the world in Oxfam’s Commitment to Reducing Inequality Index (CRI), which ranks states on what they are doing to tackle inequality.https://i1.wp.com/kenyanwallstreet.com/wp-content/uploads/2017/12/Screen-shot-2017-12-07-at-1.34.48-AM.png?resize=570%2C286

Kenya scores lowest in the East Africa region for its public spending, for example, spending less than 6% of the budget on health. It also scores the lowest in the East Africa region for progressive taxation.

The average salary for a CEO in Kenya is $114,000 per annum (or KShs11,767,650), but they will pay the same top tax rate of 30% as someone earning KShs 47,059 from 2018.

Oxfam’s analysis of the VAT system in Kenya suggests that exempting basic commodities from VAT has reduced the regressivity of the tax as the whole, which is welcome. However, exempting non-food items from VAT has benefited the rich more than the poor, as the rich are more likely to buy these products.

Oxfam is calling on the Kenyan government to develop a national plan to reduce the gap between rich and poor, with clear time bound targets. Oxfam has identified five key steps that the government can take to deliver on such a plan, and reduce inequality in Kenya. By taxing effectively, it can redistribute income and wealth while raising much needed revenue to invest in quality, free public health and education services which are proven to reduce extreme inequality.

The analysis of the composition of Kenya’s tax base shows that the structure of the system is not levying taxpayers according to their ability to pay. Those who accumulate income and wealth on capital and financial assets they own or from which they benefit are not taxed proportionate to their level of income and wealth. Taxes on wealth, including recurrent taxes on wealth and property, and inheritance taxes, are an important tool to address inequality, since they are highly progressive, targeting only the richest group in society. Moreover, they are vital to prevent excessive concentrations of wealth and power in the hands of a few,

The country needs a major overhaul, an exercise that should be spear-headed by honest individuals and not by self-seeking jokers.

Jesus Lord!.. the Marxists with their socialist propaganda have landed in Kenya. They want us to have a welfare sysytem. You can never legislate equality, this is the reason countries like Sweeden are being wasted slowly but surely. You take money from the successful and give it to refugees who sit down and do nothing. This system will remove all motivation to aspire to be CEOs. The only role of a government is to create conditions for individuals to prosper not to forcefully take money from the successful inorder to ‘redistribute’. As for the desperately needy who may need the initial push, the revenue generated with the current tax rates is enough to lift them up; if only it’s properly managed. Say no to the welfare system.

can never work in Kenya,if reforms to reduce pay by the remuneration commission was overturned .WILL THIS WORK ? (Karl Marx ideology is hard to implement the rich will always oppress the underprivileged)

Endless, useless, politicking instead of working is making many poor

a) oxfam is chieth. Oxfam and the salvation army are the two largest exporters of second hand clothes to sub saharan Africa. In the '80s, the textile industry in kenya employed 200,000 people equivalent to 1.5%of the population until a one two punch of structural adjustments and opportunistic vultures such as the above named killed the industry. So they can keep their concerns.
b) what is their source data. Estimating wealth is a funny science bordering on alchemy, especially in Africa where people go to great lengths to hide their wealth.
c) i think this is an alarmist report meant to provoke a knee jerk reaction. Kenya should seek to expand the tax base before raising the tax bracket on higher earners.

higher taxes won’t help much. they only enrich the already rich.
Kama sasa unaenda industrial area and just watch from a distance kijana mluhya kijana baro baro anaingia job 2018 with a very youthful walk.

Aki ya nani kijana anabeba gunia za 150kg hadi anakuwa mfupi.
10 years into the job he is already an old man. Ame breathe in simiti hadi he’s just an empty broken shell.

What we need to do is educate that mhindi owner to treat the donkey well no pun intended. Give the workers hot showers. Hire a chef feed your workers like they do in Japan. They will work better and longer. By treating the worker well you’ll start building a better community.

In Kenya the worker is a slave. Improve the life of the worker and you improve the whole country. It happened in the U.S.

Huku unakuta hadi karao anaishi kama wild animal. High taxes won’t help him. It’s about changing mind sets and treating people right.

:D:D:D Huo ufafanuzi wako jo…

Na sio jokes by the way. Early America was built by Christians at least most of it. And the early industrialists realized that if you don’t treat workers right, e.g. build them houses they will do the obvious; they will build slums. Na si hivo ndio kuko Kenya leo.

Those guys understood that when God says don’t trick your fellow man He is absolutely right. Of course America is not like that today. They are just greedy like everyone else. But many of the towns that are there today were built long ago for working families. Built around factories. And they were affordable.

Henry ford told his workers to build cars they could drive themselves. And they actually built cars that they eventually could afford to own. They owned what they built. Enablers. Huku mhindi ana trick mwafrika but forgets that the hungry worker’s son is waiting outside the factory with a panga to rob his as*.

Huku mjamaa anapiga mawe fifty years and he’ll never live in a stone house. Or jamaa ni plumber but he’ll never see a water tap in house. There is no enabler.

Companies like Hershey or the Mars chocolate factory in the U.S. were started by wazees who had a human spirit. They actually built whole towns kitted out fully for their workers to live in, complete with schools!

And it paid off big time. Those companies are monsters today, billion dollar empires. The backbone of a super power. And the workers protect those companies like their own children. Some workers are 6th generation workers. Yaani your great great great grandfather was the first to work there na nyinyi wote mmesomeshwa na hio company and you all work there. And the CEO gives workers opportunities to thrive. You can move from a janitor to a manager.

Some of what you say is true. Industrialization in the US happened out of a need. Those companies ( you mention) just chose a path that they could gain a profit while benefiting their hometowns. Very rare today btw. It is all corporate. Think about how many early 20th century companies still exist. The most flexible expenditure in any for profit institution is labor. You can hire and fire as you want, abuse and underpay(in instances where the government is not too kin). Which is what the wahindi capitalize. They see the desperation and use it to their gain. Somebody ( or a group of people) are needed with a mindset to change the path of the country to full industrialization. Sadly it has to come from the leadership.

I concur, look at Germany average salary is about 4000 euros, unemployed get around 2500-3000. why work when the difference in income is low? No to welfare systems

This would equate to punishing the rich for the efforts. The only sustainable way to reduce the wealth gap is by electing visionary leaders who have the welfare of people at heart to help fight corruption and engage in initiatives/projects that will make the common mwananchi self-reliant.

Not leadership only, but a willing citizenry. remember when the youth fund landed, the committee said that 90% of all youth groups applied for loans to open wines and spirit shops. can you imagine that clusterfuckery? we have good ideas but proper regulation needs to be formulated as we give out this money. the youth need to think beyond liquor and come up with solid ideas that can outlive one generation.

Problem is we teach dependent ideology in school. Thinking outside the box is literally taught in schools in industrialized nations.