Taxing for a more equal Kenya

A five-point plan to tackle inequality in Kenya

The chaos, noise, and density of the slum is neatly juxtaposed with the orderly calm green of the Royal Nairobi Golf Club, which opened in 1906. Unequal Scenes - by Johnny Miller
Paper author: 
Oxfam in Kenya
Paper publication date: 
Tuesday, December 5, 2017

The gap between the richest and poorest has reached extreme levels in Kenya. With 7,500 new millionaires set to be created over the next decade, it appears that a minority of wealthy individuals and investors are creaming off the yields of economic growth. While the number of millionaires is growing, millions of people still live in complete destitution.

But extreme inequality is not inevitable, it is a matter of political choice. This is clearly recognized by Uhuru Kenyatta, President of Kenya, when he says ‘Inequality can be tackled. Public spending on high-quality education and healthcare reduces inequality.’[i] Ensuring fiscal justice is key to fighting inequality. However, the taxation system in Kenya could do more to redistribute income and wealth, and to raise revenues to fund essential public healthcare and education services. The government must increase its tax to GDP ratio towards the country’s maximum tax capacity to ensure revenues are available to invest in public healthcare and education. On the spending side, progress on improving healthcare needs to take place at a faster rate, and the government needs to stop the privatization which is threatening gains made in education.

The government of Kenya can embark on a new path towards prosperity by developing a national action plan to reduce the gap between the rich and the poor, with clear timebound targets. The government should ensure that national income and consumption data is regularly updated and made publicly available to ensure that inequality trends can be monitored. Oxfam has identified five key steps that the government can take to deliver on such a plan, and reduce inequality in Kenya.

With the right policy decisions, the government can start to turn the tide on extreme inequality. By tackling inequality, the government can help to lift millions out of poverty, ensure sustainable economic growth and start to bring together a divided country. Ultimately, this will help Kenya to meet its Vision 2030 goals and achieve SDG 10 on ‘reduced inequalities’.[ii] By taking action now to tackle extreme economic inequality, the government can ensure a more prosperous and equitable future for all Kenyans.

 

Notes

[i] UNDP Africa (2016). Income Inequality Trends in sub-Saharan Africa: Divergence, Determinants, and Consequences. http://www.africa.undp.org/content/rba/en/home/library/reports/income-inequality-trends-in-sub-saharan-africa--divergence--dete.html