Challenges of County Government Property Taxation in Nairobi City

Abstract

This study evaluates the challenges of property taxation under the county government in Nairobi City. Property taxation, if well exploited, can be a major source of revenue at the county government level which is required in provision of urban services and infrastructure. Nairobi has not been generating adequate revenue from property taxation due to various challenges as identified in the study. The study used survey design where interviews were conducted to officials under Land Valuation directorates of Nairobi. Review of documents was also done. The study established that property taxation in Nairobi City faces many challenges that relate to policy and its administration. The legal framework for property taxation is inadequate and has not been reviewed to keep up with the increased property development in the city; Nairobi uses two systems of taxation; namely site value and area rating, which have resulted to a narrow tax base and reduced uniformity of property taxation, and there are no regular revaluations of the tax base. Property taxation also faces the challenge of lack of political good will. These challenges have resulted in low revenue generation from property taxation in Nairobi. The study recommends review of the national laws relating to property taxation, that the City use only capital value-based method of property taxation with elimination of the current area-based system, reduction of exemptions, widening of the tax base, and use of mass valuation methods.