By Prof. Karuti Kanyinga
Adapted from an article first published by the Daily Nation
The debate around tax evasion by Kenya’s rich and powerful has persisted for years. Unfortunately, this is not a uniquely Kenyan problem — globally, the economic and political elite have long exploited systems to avoid paying their fair share of taxes.
What makes the issue even more troubling is the elite’s ability to capture governments. They dominate policy and decision-making spaces, often enacting laws and policies that benefit their own interests. In many cases, they lobby lawmakers to craft legislation that protects their wealth while exempting them from taxation obligations. Ironically, these same individuals benefit the most from the public goods funded by the taxes they evade — services such as security, infrastructure, healthcare, and education.
Tax havens, inaccessible to ordinary citizens, exist primarily because the wealthy use them to hide money earned domestically and abroad. In countries with weak accountability systems, tax exemptions and breaks are routinely granted to the elite. Through their financial clout and influence over lobby groups, they ensure this cycle never ends.
Trade liberalization policies are another tool the elite exploit. For example, in Tanzania, investors from Gulf states once took advantage of tax incentives in the service sector. When those incentives expired, they simply shifted investments and began a new cycle of evasion, often with the blessing of politically connected families, including those in the highest offices. Kenya is no exception — recent media reports reveal how the country’s elite decide how much tax to pay, when to pay, or whether to pay at all.
Those who benefit the most from public services funded by taxes — the rich and powerful — are often the ones who work hardest to avoid paying them.
This is not new. There has never been a political regime immune to the influence of the rich and powerful when it comes to taxes and public resources. Tax evasion by elites is a historical, global problem, rooted in their control of policy spaces — spaces ordinary citizens rarely occupy. As a result, it is the ordinary citizens who end up paying their dues without hesitation, while the elite act with impunity.
More than 2,500 years ago, the Greek philosopher Plato warned of this injustice. He noted that “just men will pay more and the unjust men pay less for the same amount of income.” He was describing the same social dynamic we see today — where those pretending to be just act otherwise.
Even ancient societies tried to combat tax evasion. In the Roman Empire, whistleblowers were rewarded for exposing tax cheats. In Venice, there is still a stone at the Ducal Palace with a hole through which citizens could report tax evaders — a predecessor of today’s tax fraud hotlines. In modern times, some tax administrations offer whistleblowers a percentage of the recovered tax as incentive.
Taxation is essential for any functioning society. It is the foundation for financing development and providing universal access to public services — services that cannot be denied to anyone: roads, schools, hospitals, and security. Without taxes, governments would simply lack the capacity to provide these essentials.
Countries with high tax-to-GDP ratios tend to have three things in common:
- Accountability in public spending. Wasteful use of public resources is publicly questioned, and governments can lose elections over it.
- Legitimate and trusted tax authorities. These institutions collect revenue fairly, without favouring anyone, and laws are applied consistently.
- Responsible public resource allocation. Citizens’ preferences guide how money is spent, and no group — not even the rich and powerful — is unfairly prioritized in service delivery.
But Kenya presents a different picture. The elite continue to evade taxes while enjoying personal security and public services funded by the very taxes they dodge. In the 1990s, tax exemptions were routine — even for luxury items like imported mineral water, perfumes, and cooking oil. Whether that has changed significantly is open to debate. What is clear is that a substantial portion of the tax that should be collected remains uncollected due to evasion, corruption, and preferential treatment for the elite.
Worse still is the rise of the underworld economy, in which the rich and powerful are deeply involved. Through porous borders, they import goods without paying taxes — a legacy that goes back to the “Chepkube” days in Bungoma, when coffee from Uganda would be smuggled into Kenya. Today, illicit trade in goods like rice, maize, and sugar continues to harm the economy.
The National Treasury itself has acknowledged that Kenya lacks the funds to sustain its budget — akin to a household forced to pick only what it can afford at the market. Yet this financial squeeze is largely the result of the elite lobbying for poor policy choices that favour their interests.
Their resistance to devolution is another example of this self-interest. Devolution could ensure more equitable development across counties and increase domestic revenues. But because it threatens elite control, it remains stifled.
About the Author
Prof. Karuti Kanyinga is a Research Professor at the Institute for Development Studies (IDS), University of Nairobi. He is a distinguished scholar in governance, development, and public policy, with extensive research on political participation and electoral processes in Kenya.