Why Kenya must embrace progressive taxation

At Nairobi’s Muthurwa market, Mary Wanjiku wakes up before dawn to arrange tomatoes and onions at her wooden stall. By evening, she has paid a string of levies—market fees, security charges, and the “compliance” charges demanded by county askaris (officers).

What remains is barely enough to feed her family. “I sell to survive, but it feels like I work for the county,” she says. Her lamentation is echoed across Kenya’s informal markets, where traders and small business owners struggle under the weight of a tax system that leans heavily on the poor while letting the wealthy breathe easily.

This is not just inefficient—it is unjust. The National Taxpayers Association (NTA) is now calling for a reset. Its campaign for inclusive taxation urges national and county governments to adopt progressive tax measures—where those with greater ability to pay contribute more. At stake is not just revenue, but fairness and economic dignity.

When tax becomes a barrier

Taxes are the lifeblood of any economy. They fund schools, hospitals, infrastructure and social protection. But when the design is regressive—where the poor shoulder the heaviest burden—they become a barrier to growth and a source of exclusion.

As NTA Chief Executive Patrick Nyangweso observes, “Kenya’s tax system doesn’t favour those at the bottom of the pyramid while rewarding those at the top. Women in informal markets, youth entrepreneurs, SMEs (small and medium enterprises), and persons with disabilities are paying more than their fair share. That is not fiscal justice—it is economic exclusion.”

The situation is particularly dire for SMEs, which employ the majority of Kenyans. Instead of nurturing them, taxation suffocates them with multiple levies, costly compliance, and little relief.

A boda boda rider, a hairdresser in Umoja, or a carpenter in Kisumu often pays more proportionally than a multinational corporation with elaborate tax shields. You cannot keep punishing the very businesses that drive our economy.

Youth-led startups in technology and the creative industries—the very spaces Kenya hopes will drive innovation—face bureaucratic hurdles at every turn. Complex registration and filing procedures deter many from formalising their ventures.

This leaves them vulnerable to harassment and denies the country badly needed tax revenue. For women, the problem cuts even deeper. Informal traders, who already grapple with slim profit margins, face unregulated county levies that chip away at their earnings.

Persons with disabilities, meanwhile, contend with the extra costs of healthcare and assistive devices but receive little or no targeted tax relief. Here is the moral dilemma: a mother buying maize flour for her children pays the same VAT rate as someone buying champagne. That is not equity; it is cruelty disguised as taxation.

A blueprint for fairness

The NTA is not merely diagnosing the problem; it has outlined concrete solutions.

These include reducing VAT on essential goods to shield low-income households, simplifying tax filing for SMEs and startups to encourage formalisation and introducing tax credits for persons with disabilities and their caregivers.

Other measures are incentivising inclusive workplaces to expand opportunities, and tiered county fee structures that reflect business size and income, so that a vegetable vendor is not taxed like a supermarket chain. At the county level, transparency and accountability must be at the centre. Kenyans have every right to ask why they pay so much but see so little in return.

Kenya does not need to reinvent the wheel. South Africa exempts assistive devices from VAT to ease the burden on persons with disabilities.

India grants tax holidays for startups, giving them room to grow before contributing fully. The United Kingdom integrates gender-sensitive budgeting into fiscal policy, ensuring women are not disproportionately disadvantaged.

These models show that progressive taxation is not an abstract theory. It is practical, achievable, and effective.

Building trust in the system

The heart of the matter is trust. Citizens are more willing to pay taxes when they believe the system is fair and that their money is put to good use.

Kenya’s recent experiences with ballooning debt, stalled projects, and corruption scandals have eroded that trust. Regressive taxation only makes it worse, fueling resentment and encouraging tax evasion.

Progressive taxation, by contrast, has the power to rebuild social trust. When citizens see that the wealthy contribute to their fair share and that the vulnerable are protected, they are more likely to comply willingly.

Kenya has a choice. It can cling to a regressive system that entrenches inequality, stifles SMEs, and punishes women, youth, and persons with disabilities or it can embrace progressive taxation as a tool for fairness, dignity, and prosperity.

-The writer is a social entrepreneur, consultant and editor of the book, Africa, The Enslaved Continent