Tax the rich more to cushion the poor, firm tells State

Wealthy people should be taxed more to address growing social inequality, Oxfam has said in a new report.

The charitable organisation noted that about 8,300, or less than 0.1 per cent of Kenya’s population, owns more wealth than the bottom 99.9 per cent.

To address inequality, Oxfam proposes in the report dubbed “Reward Work, Not Wealth” what it calls “fiscal justice” – progressive taxation to redistribute and raise revenue for essential public services.

This money would then be used in public services such as education, healthcare and sanitation. To this end, Oxfam recommends the introduction of more tax bands for the rich even as they review them for inflation to cushion the poor.

Immovable property

It also wants the tax on the transfer of wealth, known as capital gains tax, to be extended to listed companies as well rather than being restricted to the transfer of immovable property such as land and buildings and unquoted shares.

At five per cent, Oxfam feels the capital gains tax is relatively low.

“Capital gains tax is set at only five per cent and is applied solely to the transfer of immovable property and unquoted shares,” reads the report released in Nairobi yesterday.

It says there is also a need for introduction of inheritance tax or net wealth tax.

“Increase tax transparency in the country so as to deal with the problem of transfer pricing- a situation where a subsidiary company sells goods to a parent company,” said Joy Ndubai, the tax dialogue programme officer at Oxfam.