18 March 2019

Kenya: City Hall Says Govt Entities Owe Most of Sh120bn Rates Debt

The national government has been flagged as the biggest defaulter in payment of land rates to City Hall, accounting for most of the Sh120 billion debt owed county.

Government institutions, including Parliament, Department of Defence (DoD), Parliamentary Service Commission, Central Police, National Treasury, Vigilance House, Kenyatta International Convention Centre, have been mentioned as some of the biggest culprits.

City Hall Head of Rates Albert Okiro, who appeared before Nairobi County Assembly Budget and Appropriations Committee on Monday said that only 150, 000 properties pay land rates out of more than 1.5 million properties in the capital.

"The national government is one of the biggest defaulters since it has a lot of properties in the city centre that do not pay land rates. Some parastatals and even all the police stations don't pay rates all. In total we are owed Sh120 billion in land rates," said Mr Okiro.

REVENUE TARGETS

Government agencies, Mr Okiro said, have resorted to legal battles to slow down payment of rate arrears.

The committee summoned the official to explain why City Hall has not met been meeting its revenue targets.

Mr Mbatai said City Hall's rates collection have been falling since 2016 despite being charged at a constant rate of 34 percent.

The county has only collected Sh12.9 billion in land rates against a target of Sh21 billion for the period since 2013.

It was revealed the City Hall collected Sh2.6 billion in the 2013/14 financial year, Sh2.7 billion the following year and Sh3.2 billion in the 2015/16.

In 2016/ 17 it collected Sh2.6 billion, a figure that dropped to Sh1.8 billion the following year.

The committee's vice chairman Peter Karani said he was concerned that the county's rates collection were dwindling yet it launched an ambitious strategy to net defaulters.

In 2017, ward representatives amended the Revenue Act 2015 to give City Hall powers to temporarily repossess defaulting properties.

Now, only Sh1.1 billion has been collected in the year ending June against a target of Sh4.6 billion.

OBSTACLES

But Mr Oriko said lack of title deeds for properties, an aged valuation system and long legal processes have hindered efficient collection of land rates.

"We base the rates we charge on title deeds but most of the properties in Nairobi do not have titles, meaning they do not pay their land rates," he said.

"The valuation system was last updated in 1982 and since then the value of property has tremendously increased. Local Authority Integrated Financial Operations Management System (LAIFOM) is very old and often doesn't give accurate results," he said.

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