To relieve low-income earners of their burden, the National Taxpayers Association (NTA) has urged the Treasury to create a “wealth tax” that may generate over KSh 100 billion yearly. According to the lobby organization, persons with net worths over $100 million should pay 5%, while those with net worths between $3 million and $100 million should pay 3%. Only 16 people, according to the NTA, have a net worth of more than $100 million, and the government might make more than KSh 20 billion. The Treasury collection will increase by KSh 58 billion for those with net worths between US$ 3 million and US$ 100 million. “An ongoing source of money for these projects might be provided by enacting an annual wealth tax as opposed to a one-time measure. In the report, the NTA stated that it will also act as a continuous mechanism to reduce wealth concentration, which the statistics on income disparity indicate is a recurring problem in Kenya. 5,700 people with net worths between $1 million and $3 million made up the majority of the NTA’s evaluation. A 1.5% wealth tax on this group is what the lobbyists are proposing, which could increase domestic income by KSh 22 billion a year.
The call for a wealth tax
The lobby organization determined potential obstacles to Kenya’s wealth tax implementation. These include errors in data collection and analysis of wealth holdings, the taxman’s faulty methods for assessing assets like businesses and land, and unavoidable political opposition. Even though the KRA has a top-notch tax office catering to wealthy people, the NTA thinks that tighter coordination with global tax programs will eliminate the gaps in tax avoidance and evasion. To stop capital flight and decreased investment, the government must also carefully evaluate fair and balanced tax rates for these high-net-worth individuals. In addition to targeted measures like inheritance taxes and luxury goods taxes, as well as possibly context-specific features like idle land or high-value livestock taxation, a comprehensive wealth tax regime for Kenya might incorporate aspects of traditional net worth taxation, according to the advocacy group. Only 84 Kenyans with high net worth were listed on the taxpayer’s registry, according to the NTA, which praised Uganda’s efforts to identify high-net-worth persons. Real estate holdings, financial assets like stocks and bonds, business ventures, expensive personal goods like yachts and airplanes, and intellectual property rights are all considered taxable assets. The lobbyists also suggested that depending on different assessments, non-primary dwellings or idle land should pay taxes ranging from 1% to 3%.
Who is behind the lobbying effort?
Kenya might use Switzerland, which has a long history of wealth taxation, as a model to handle valuation issues. Swiss cantons employ a variety of techniques, such as insurance values for high-value personal property, capitalized earnings approaches for unlisted companies, and market values for listed stocks and real estate, according to the NTA. The richest 10% of Kenyans own about 50% of the country’s pre-tax income, according to the World Inequality Database. 15.3% of income is controlled by an even smaller 1%. This background information is used by the lobbyists to support their claims that the wealth tax is justified and to validate the unequal distribution of wealth. As income inequality widens, the wealth tax has been a hot topic of discussion in recent years worldwide. The governments of nations like Sweden, where this tax was common in the 20th century, eliminated it in 2007 due to concerns about capital flight. Other countries, such as the UK, are thinking about imposing a 1.5% wealth tax on assets worth more than £750,000. South Africa, Canada, and Germany have all discussed the same ideas. Wealth taxes, such as inheritance taxes and capital gains taxes, are currently in place in countries including Argentina, Spain, Norway, Switzerland, and Belgium. Regardless of the arguments they exacerbate, the lobbyists insist that these levies stop illegal wealth flows and close fiscal deficits.
Arguments in favor of taxing the rich
Patriotic millionaires are not the only ones who have the idea to redefine and clarify what income is and to restructure the tax system. For the past ten years, Ingrid Robeyns, a philosophy and economics professor at Utrecht University in the Netherlands, has been developing a theory of wealth that she refers to as limitarianism. For instance, she feels that no one person should own more than 10 million euros in a nation like the Netherlands. She quickly clarifies, however, that this is only an estimate and may change based on the particular economic conditions of each nation. In addition, Professor Robeyns thinks that people should consider the moral implications of their wealth.
