Editorials

Use Sh100,000 pay data to fix tax gaps

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GRAPHIC | CHRISPUS BARGORETT | NMG

The share of workers earning more than Sh100,000 a month has once again brought to the fore the problem of tax evasion and Kenya’s income inequality.

Last year, the number of workers earning more than Sh100,000 stood at 371,894, representing 12 percent of the total workforce.

That 42 percent of the workers are on gross pay of less than Sh50,000 calls for bridging the gaps between the rank and file workers and the super earners in the race to boost economic inclusion.

But the data could also point to tax avoidance by wealthy Kenyans in the informal sector.

The small number of top earners is not in line with luxury spending and accumulation of property being witnessed.

Kenya has struggled to bring more people into the tax bracket and curb tax cheating and evasion as the government fails to meet its revenue targets consistently.

This calls for targeted reforms to net wealthy traders who are not paying their fair share of taxes.

The devolved system of government, which took off in 2013, raised hopes of addressing the economic imbalance, but there is a need to offer incentives to attract private investors to counties and spread the wealth.

Policymakers ought to focus on agriculture and agro-based industries, which appear to be the worst performing sectors evaluated for the latest Kenya National Bureau of Statistics data.

It will also be important to increase synergy and linkages between sectors to grow fortunes of workers.