Civil society groups, lawmakers and fiscal policy experts are pushing Parliament to overhaul the Finance Bill 2026 by targeting rich individuals and high-value assets.
The move, they say, could raise an additional $1 billion (Sh129 billion) while shielding low-income Kenyans from more economic hardship.
The proposals, presented during engagements on the Finance Bill and the 2026-27 budget process, seek to expand taxation on luxury assets, capital gains and hidden wealth instead of increasing the burden on salaried workers and consumers already struggling with the high cost of living.
The Institute of Public Finance (IPF), Oxfam Kenya and the Kenya Human Rights Commission (KHRC) said Kenya’s tax system remains overly dependent on consumption taxes such as VAT and PAYE, which disproportionately affect low-income earners.
Stakeholders argued that the government should instead focus on taxing high-net-worth individuals, luxury sectors and speculative investments to finance public services, including healthcare and education.
“Wealth taxation is not necessarily about introducing punitive new taxes. It is about ensuring people with the greatest ability to pay contribute their fair share,” said economic policy and fiscal justice advocate of the high court Emily Wakesho.
The push comes as Parliament debates proposals that would exempt workers earning below Sh30,000 from certain deductions while also introducing a raft of tax changes affecting businesses, consumers and investors.
However, lobby groups warned that some clauses in the Bill could deepen inequality by granting tax exemptions to wealthy investors while ordinary Kenyans continue to shoulder rising living costs.
Among the most contested provisions is a proposal to exempt some real estate investment trust transactions from capital gains tax.
Policy analysts said the exemption risks widening tax loopholes for wealthy investors with large property portfolios.
IPF researchers argued that individuals operating in the real estate sector often hold significant wealth and should not benefit from additional tax reliefs at a time when the government is struggling to raise revenue.
The groups also criticised proposed exemptions in the aviation sector, including tax reliefs linked to aircraft operations.
Kisumu County Woman Representative Ruth Odinga said luxury industries such as aviation should contribute more to public finances instead of receiving exemptions.
“Travelling by air is one of the most privileged sectors. The taxes paid there should help reduce the burden on ordinary Kenyans,” she said.
The debate has intensified amid growing concerns that Kenya’s fiscal policy increasingly favours wealthy individuals while placing pressure on consumers through indirect taxes.
According to a recent IPF report titled “Tax the Rich! Can Kenya Get Wealth Taxation Right?”, Kenya has approximately 7,200 dollar millionaires with assets exceeding Sh129 million and at least 16 centi-millionaires with net assets above Sh12.9 billion.
IPF argues that a carefully designed wealth tax targeting ultra-high-net-worth individuals could generate substantial revenue while improving equity in the tax system.
However, the study also warns that Kenya faces major structural challenges before implementing a comprehensive wealth tax.
“There is a lot of money Kenya is losing because wealthy individuals can avoid taxes while ordinary people pay every day through VAT and PAYE,” said KHRC inclusion and political justice manager Annet Nerima.
These include weak tax enforcement systems, fragmented asset databases, political interference and the risk of capital flight by wealthy individuals shifting assets abroad.
IPF points out that the Kenya Revenue Authority’s High-Net-Worth Individuals unit has struggled with low compliance and difficulties tracking undeclared wealth.
Stakeholders said reforms should therefore focus not only on new taxes but also on strengthening enforcement, improving asset disclosure systems and curbing corruption.
Civil society groups further warned against tax changes that could increase production costs for manufacturers.
“We continue to advance the case for wealth taxation as an alternative pathway to domestic resource mobilization, one that reduces over-reliance on consumption taxes that disproportionately burden households & small businesses,” added Nerima.
The Finance Bill proposes moving several goods from zero-rated VAT status to exempt status, including animal feed, pharmaceutical raw materials, motorcycles and electric bicycles.
Analysts warned the changes could prevent manufacturers from claiming VAT input credits, increasing production costs and eventually pushing up consumer prices.
Evidence presented to lawmakers suggested that easing PAYE obligations on low-income workers could boost disposable income, stimulate consumer spending and support economic growth.
