A recent report by the National Taxpayers Association (NTA) has revealed that Kenya's current tax system may be losing out on a significant revenue stream, with the potential to generate $781 million (Sh100.75 billion) by taxing high net worth individuals. The report, titled "Taxing Wealth in Kenya," suggests that the government could expand its tax base by incorporating an array of assets and enhancing current frameworks for financial asset taxation and property taxes.

The NTA's report proposes a three-tiered system for taxing high net worth individuals, with different tax rates based on their income levels. The first group, consisting of individuals with $1–$3 million (Sh140 million–Sh400 million) income, would pay a tax of 1.5% annually, generating $171 million (Sh22 billion) in taxes. The second group, comprising individuals with incomes of $3 to $100 million, would be taxed at 3%, with the potential to generate $450 million (Sh58 billion) for the government. Finally, the third category of individuals with incomes exceeding $100 million would be required to pay a 5% annual tax, generating around $160 million (Sh20.6 billion) in tax income.

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 real and intellectual property taxes to address this imbalance.

The NTA also recommends a gradual approach to implementing a comprehensive wealth tax regime, beginning with improved data collection and high net worth individual (HNWI) identification. This would involve thorough appraisal methods for financial and real estate assets, referencing global best practices. By designing the wealth tax to focus exclusively on HNWIs, the government can set a high threshold to exempt the majority of Kenyans, particularly household and individual savings on which tax has previously been paid.

The potential revenue generated from taxing high net worth individuals could be a significant boost to Kenya's economy, especially considering the National Treasury's rejected Finance Bill 2024 aimed to raise a similar amount. As the country continues to explore ways to increase its revenue base, the NTA's report provides a timely and thought-provoking analysis of the current tax system and its potential for reform.

The implications of this report extend beyond Kenya's borders, as it highlights the importance of fair and equitable tax systems in promoting economic growth and development. As countries across Africa and the world grapple with issues of income inequality and tax reform, the NTA's report serves as a valuable reminder of the need for comprehensive and inclusive approaches to taxation.