On November 20th, at a lively and thought-provoking dissemination workshop, Oxfam Kenya discussed the new Environmental Taxation Chapter of the Kenya Fair Tax Monitor with a range of stakeholders. This was accompanied by the publication of a new study on Regulating Tax Incentives for Enhanced Domestic Resource Mobilization in Kenya.
The event—where participants shared insights and feedback to be incorporated into the final chapter—brought together representatives from national revenue authorities, the Central Bank of Kenya, the Kenya Bankers Association, the Ministry for Foreign Affairs of Finland, as well as stakeholders from the private sector, civil society, and academia. It highlighted the significant potential of environmental taxes to advance both sustainability and revenue generation, while stressing the urgent need for transparent, well‑regulated tax incentives that safeguard public resources intended to serve communities.
Veronicah Ndegwa, Senior Research Analyst at Institute of Public Finance, who has been conducting the research on the Green FTM chapter, speaking at the workshop. Picture credit: Oxfam Kenya.
For some insights on the Environmental Taxation Chapter of the Kenya Fair Tax Monitor, read this analysis by Oxfam Novib Intern Isabel Sánchez Rotllán.
Kenya’s Environmental Taxes. Fair, Green, or Both?
Kenya is on the frontlines of the climate crisis. As droughts, floods, and polluted cities hit the most vulnerable communities first, it’s become clear that environmental harm is not just an ecological issue — it’s a question of justice. This is where Environmental Taxes (ETs) come in.
Environmental Taxes are policy tools that place a price on activities that damage our planet — like burning fuel, overusing plastic, or polluting water. The idea is simple: polluters should pay. And when designed well, these taxes don’t just protect the environment — they can also protect people.
So, where does Kenya stand?
Kenya has made progress. Taxes on fuel and plastic already exist. New regulations aim to hold companies accountable for waste. Plans are underway for a carbon tax. But this latest Fair Tax Monitor (FTM) report shows that much more can be done — and done more fairly.
The problem? Inequality.
In theory, environmental taxes work well. In practice, they can hurt those least responsible for the damage. For example:
- Fuel taxes raise transport and food prices, affecting low-income families the most.
- Kerosene taxes may encourage cleaner cooking — but only if alternatives like gas or solar are affordable.
- Plastic taxes may reduce pollution, but if not designed carefully, they could raise the price of bread or nappies for children.
The challenge is clear: How can Kenya design green taxes that don’t deepen poverty, but instead fund solutions that uplift everyone?
The FTM report seeks to respond to this challenge and offers a roadmap on how to get there:
- Reform bad subsidies: Kenya still spends billions on fuel and fertilizer subsidies that harm the planet and benefit the wealthy. Redirecting these funds to green infrastructure or clean energy access would have double benefits.
- Make polluters pay more: Taxes on luxury vehicles, super-yachts, and high-pollution industries could be scaled up, with minimal impact on the poor.
- Use the money wisely: Revenue from environmental taxes must be reinvested — in solar energy for rural areas, cleaner public transport, waste recycling, and social safety nets like cash transfers.
- Think equity, not just efficiency: Gender matters. Geography matters. Access matters. A clean energy solution for Nairobi may not work in Turkana. Women may face the brunt of fuel hikes. Solutions must reflect this.
A just green transition is possible
Fair environmental taxation is not a luxury for wealthy countries — it’s a necessity for all. Kenya has the tools, the data, and the institutional foundations to get there. But it will take political will, strong public trust, and inclusive policy design. As the climate clock ticks louder, the message is clear; climate action must be fair, or it won’t be effective. And tax justice is climate justice.
Find out more about the Green Taxes chapter of the Fair Tax Monitor methodology here.