Why counties embraced land rates waivers

It is an obligation for Kenyan property owners to pay the county governments rates based on the market value of their property.

However, many property owners default. it is for this reason that county governments have been falling over themselves to offer rates waivers to make more people pay these rates. However, these offers sometimes do not meet their target.

Three years ago, Nairobi County was among the first to go this route with the governor, Evans Kidero,  announcing 100 per cent waiver to all land rates defaulters who would settle their debts that they owed the County Government in a months’ time.

At the time, Kidero reported, the city had 150,000 residents who were eligible to pay rates but most were not paying.

Only a third of about 400,000 plots registered within the city were paying the rates with unapproved structures standing at about 50,000 by 2015.

In total, residents and institutions owed the county government more than Sh150 billion in defaulted land rates. Government parastatals alone had a debt totaling to Sh1.2 billion, public institutions owed the county Sh3.4 billion and other residential and commercial properties together owed Sh136 billion. 

Land buying companies who had about 20,000 accounts owed Sh7.2 billion. This are the kind of debts the devolved systems have been grappling with over the years being one of the revenue sources for the governments.

More on board

Since then, other county governments have followed suit in an attempt to recover debts.

The latest county governments to offer land rates waivers to their residents include Mombasa, Kiambu, Kilifi, Meru, and Kericho counties. “When we undertook our land rates waiver in 2016 we experienced a 95 per cent turn up although the response was not that good this year,” says George Haya,  the director of finance in Kiambu County.

“Land rates waivers are administered regularly by authorities in accordance with the law and in such a way that they cannot over burden the tax payers. They help in encouraging them to pay taxes which helps in developing and managing the areas they live as well as ensuring that the unapproved structures in major urban areas are rechecked and approved on a regular basis,” says Haya.

He says that for many authorities, it is only the penalty and the accrued interest that is waived by certain agreed upon percentage.

“Land rate defaults are the major reason for poor revenue collection by County Governments,” says Haya.