A recent report by the National Taxpayers Association (NTA) has shed light on Kenya's potential to generate significant revenue through taxing high net worth individuals. The report, titled "Taxing Wealth in Kenya," suggests that implementing a wealth tax could bring in $781 million, approximately one-third of what the National Treasury intended to raise in the Finance Bill 2024.

The NTA's proposal involves splitting high net worth individuals into three groups, each with different tax rates based on their income levels. The first group, comprising individuals with $1–$3 million income, would pay a 1.5% annual tax, generating $171 million. The second group, with incomes of $3 to $100 million, would be taxed at 3%, potentially generating $450 million. The third category, consisting of individuals with incomes exceeding $100 million, would pay a 5% annual tax, resulting in $160 million in tax revenue.

The report highlights the unfairness of Kenya's current tax system, which disproportionately burdens the poor. According to the NTA, individuals with a monthly wage pay around 40% of their income in taxes, while the wealthy pay only a tiny percentage of their wealth. The organization argues that the government must expand the tax base and enhance current frameworks for financial asset taxation and property taxes.

The NTA also recommends adopting a gradual approach to implementing the wealth tax, starting with improved data collection and high net worth individual (HNWI) identification. This would eventually lead to a comprehensive wealth tax regime over several stages. The organization suggests that the wealth tax should focus exclusively on HNWIs, setting a high threshold to exempt the majority of Kenyans, especially household and individual savings on which tax has previously been paid.

The report's findings have significant implications for Kenya's economy, particularly in the context of the country's efforts to increase its revenue base. If implemented, the wealth tax could provide a substantial boost to the government's coffers, enabling it to invest in critical sectors such as infrastructure, education, and healthcare.

As Kenya continues to grapple with the challenges of economic development, the NTA's report serves as a timely reminder of the need for a more equitable and effective tax system. By taxing high net worth individuals, the government can reduce its reliance on regressive taxation and create a more sustainable revenue stream. As the country moves forward, it will be essential to monitor the implementation of the wealth tax and its impact on the economy.

In conclusion, the NTA's report highlights the potential of taxing high net worth individuals to generate significant revenue for Kenya. As the country navigates the complexities of economic development, it is crucial to adopt a more progressive and equitable tax system that benefits all citizens. The implementation of a wealth tax could be a critical step in this direction, enabling Kenya to achieve its development goals and create a more prosperous future for its citizens.