Taxation, Inflation Erode Happiness in Kenya, Global Study Finds

The 2024 World Happiness Report reveals a decline in Kenya's happiness score, snapping a five-year streak of positive movement.

The report places Kenya at 114 out of 143 surveyed nations, a drop of three positions compared to 2023. This marks a return to a downward trend last observed in 2018. Kenya currently sits as the 29th least happy nation globally, with Finland retaining its top position for the seventh consecutive year. The report also delves into happiness levels by age group. Young Kenyans (under 30) appear to be the most content, ranking 109th worldwide. Conversely, those in the upper middle-age bracket (45-59) report the lowest happiness levels, ranking 123rd.

Happiness levels for the lower middle-aged (30-44) and elderly (over 60) groups are more consistent, both ranking at 119th. While Kenya surpasses its East African neighbours in the overall ranking – Uganda (117th), Tanzania (131st), Ethiopia (130th), Egypt (127th), and Zambia (134th) – the reasons behind its happiness decline remain unclear. The report coincides with a period of economic challenges in Kenya, including inflation and new tax measures that have strained households and individuals.

Public outcry arose over increased government taxation, stagnant or declining wages, and rising prices for essential goods. Examples include significant deductions to the National Social Security Fund, a hike in pension contributions to 12% of wages, and a new 1% housing levy introduced in the 2023 Finance Act. The report further highlights the impact of taxation on worker-employer relationships. The introduction of higher income tax brackets (32.5% for earnings between Sh 500,000 and Ksh 800,000, and 35% for earnings exceeding Sh 800,000) has added strain.

A recent study by Tala, a digital credit company, reveals that roughly two-thirds of employed Kenyans are now resorting to additional income sources, such as agriculture and side hustles, to cope with the economic conditions. National happiness rankings can be a valuable tool for governments to assess the well-being of their citizens and implement long-term development strategies that prioritize overall welfare.