Tax on property is one of Nairobi County’s main revenue streams.
Property owners in Nairobi could end up paying 50 per cent more in land rates if MCAs approve a proposal by the county government to review the land valuation roll.
Nairobi City County Government officials yesterday said they intend to cap land rates at 0.13 per cent of a property’s value.
This new formula will replace the current practice where property owners pay 25 per cent of the land’s value as determined by the 1980 valuation roll.
Urban and Economic Planning Executive Washington Makodingo said a new land valuation roll has been completed and a proposal to cap the rates tabled in the county assembly.
A valuation roll is a legal document that assigns a value to all properties in an area, with the objective of generating land rates on an equitable basis.
It is projected that if the proposal sails through, the county will collect Sh10 billion from property taxes, up from Sh3.2 billion collected in the 2018-19 financial year.
“The value of property has shot up by 190,000 per cent in some parts of the city, but we are still using the 1980 valuation roll. People must pay before they demand services,” said Dr Makodingo, speaking in Mombasa where county officials are meeting.
The executive said land tax was one of the county’s 10 main revenue streams, and that Governor Mike Sonko’s administration expected to generate more income to meet its Sh17 billion revenue target.
“In 1980, an acre of land in Upper Hill was going for Sh400,000 and now it costs between Sh660 million and Sh1 billion, depending on the area,” said Makodingo.
The county had earlier proposed to cap the rates at one per cent of property value, but Makodinga said they reduced the amount to take care of the interests of property owners in disadvantaged areas.
During the meeting, it also emerged that parastatals and other national government agencies were the biggest defaulters on land rates and parking fees, denying the county government much-needed revenue.
The rate hike is one of the strategies the county administration is pursuing to meet its 2019-20 revenue target strained by huge pending bills and accrued taxes.
In the 2018-19 financial year, Sonko’s administration collected Sh10.25 billion, an increase of Sh139.1 million from the previous year.
Environment and Water Executive Vesca Kangogo said Mr Sonko had directed his officials to review the county’s development strategies, drop those that were not working and come up with ways to increase the absorption of the development budget.
“We are reviewing our targets and strategies to be realistic so that we can complete what we budgeted for. Our governor is also keen to pay pending bills. We know people are committing suicide all over the country because of the pending bills,” said Ms Kangogo.
A recent report by the Controller of Budget revealed that in the 2018-19 financial year, the county’s development budget absorption rate stood at 78.9 per cent.
Kangogo said the absorption rate could have been affected by a stand-off in Parliament over the Appropriation Bill, 2019, which had delayed disbursement of funds for close to four months.
The county executive team, heads of departments and the finance committee are in Mombasa to review the county’s budget. The officials are also deliberating on the county’s plans for the second quarter of the financial year. The review was necessitated by reports that the county had accrued Sh3 billion in taxes, out of which Sh2 billion has been paid.
“The county also had pending bills totaling Sh60.5 billion, some dating back to the last regime. We have reviewed and paid Sh2.6 billion,” said Makodingo.
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