The proposed levy has attracted criticism from the National Land Commission (NLC), which termed it as double taxation
The uproar surrounding the Finance Bill 2024 which sought to introduce a host of punitive taxes to Kenyans in order to fund the country’s national budget has for the past week or so uncovered a number of other issues that, if left unchecked, could subject citizens to more suffering.
Viral Tea has learnt of the existence of the proposal to amend the Land Act of 2012 via the Land Amendment Bill number 2 of 2023, which proposes to insert a new clause which will force freehold land owners, property owners who enjoy free ownership for perpetuity and can use the land for any purposes, to pay land rent.
In simple terms, say you own a piece of land in Kiambu, one that has been passed down to you by your ancestors and you will pass it down to your next generation…and you have not been paying any rent for it, and at no point will you do so in your life and at no point will your children be forced to pay land rent. This bill aims to make you do the opposite.
According to the Bill, the Land Act 2012 is amended by inserting the new section immediately after section 54 which states that the owner of any freehold land within the boundaries of any urban area or city shall pay an annual land levy equivalent to the land rent charged on a comparable leasehold property of the same size in the same zone. However, agricultural landowners may be exempt.
A view of Ardhi House in Nairobi. /FILE
However, the proposed levy has attracted criticism from the National Land Commission (NLC), which termed it as double taxation given that this would affect homeowners on ancestral land in urban fringes like Dagoretti in Nairobi and Kiambu towns.
“There should be no levy charged on freehold land apart from rates,” NLC chief executive Kabale Tache told MPs in February. “Freehold interests are superior interests and there is no landlord and therefore no rent can be owed.”
Experts also opined that in the event the Bill is enacted, the amendments, currently awaiting scheduling for second reading before Parliament, could see hundreds of Kenyans lose their property to the government.
According to Dr Mwenda Makathimo, the Executive Director of the Land Development and Governance Institute (LDGI), this Bill would amount to taxing Kenyans for owning land in urban areas.
“This means the government is charging you a tax for owning freehold land which is not government land. That is what this Act will bring. The land you might have inherited from your parents or land that you might have bought is freehold land,” he told Citizen TV.
“Imposing this annual levy on land that is freehold property essentially has the effect of converting freehold property into leasehold property and by that, running the risk of dispossessing many Kenyans who may not afford to pay the levy and this includes indigenous people whose lands are ancestral,” Eva Makori, Acting Regional Coordinator, International Land Coalition (ILC) Africa added.
The Bill is sponsored by Ruiru Member of Parliament Simon King’ara, and could further give the Lands Cabinet Secretary power to acquire land compulsorily whenever the county or the national government determines that there is a need to acquire a particular piece of land.
However, Dr Makathimo believes that this will be retrogressive in the long run, adding that the Bill is taking away the power from an independent commission and this could expose Kenyans to significant losses should there be a need for compulsory acquisitions.
“This brings in more risks; risks that can lead to arbitrary denial of property rights as provided under article 40; arbitrary denial of just compensation in case of compulsory acquisition for a public purpose, so, therefore, the amendment is retrogressive,” he said.
“It is returning Kenya to the framework where land was managed and held on behalf of the President before the 2010 Constitution.”
“Any amendment should not be contrary to the current title or interest that the person holds. if the Constitution says you have a right to property then that should be protected. If the land law says you have a freehold interest and that interest carries an ultimate or superior title, where you are not paying annual land rate then that should be considered,” Marjorie Kivuva, Partner, Tarra Agility Africa added.
Although part of the Land Laws (Amendment) (No.2) Bill 2023, the levy has been mistakenly linked to the Finance Bill due to the concurrent anti-tax protests.
National Assembly Majority Leader Kimani Ichung’wah introduced a new bill that includes a provision similar to one he withdrew earlier this year. The previous bill was withdrawn on April 19, as announced by Speaker Moses Wetang’ula.
However, the current bill still contains a controversial levy on freehold land, which has raised concerns among some lawmakers, including members of the committee reviewing the bill. Some MPs who own freehold land are reportedly uneasy about the proposed levy.
In December, MPs voted to reduce the publication period of the bill from 14 days to one day, expediting its introduction to the House.
This decision was made in conjunction with a similar motion to shorten the publication period of the Affordable Housing Bill, another piece of legislation that has garnered significant attention.
A bird’s eye view of Parliament as of June 6, 2024. /PARLIAMENT OF KENYA