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Economy

Life gets tougher in Nairobi as City Hall raises charges

 Nairobi County governor Evans Kidero (L) prepares to sign the County’s finance bill 2013 in his office on September 04, 2013.Looking on are his legal advisor Gad Awuonda (center) and County finance secretary Gregory Mwakanongo DENISH OCHIENG
Nairobi County governor Evans Kidero (L) prepares to sign the County’s finance bill 2013 in his office on September 04, 2013.Looking on are his legal advisor Gad Awuonda (center) and County finance secretary Gregory Mwakanongo. Photo/DENISH OCHIENG 

The cost of living is set to rise even further in Nairobi after Governor Evans Kidero signed into law the County Finance Bill that authorises a sharp increase in fees, taxes and service charges. 

The new law, which has received the full stamp of approval with its publication in the County Gazette, has increased charges in nearly all service areas by margins of up to 100 per cent.  

When the law comes into force, property owners will pay land rates at the rate of 34 per cent or double the current rate of 17 per cent.

The gazette notice says the law comes into application 14 days after its signing but City Hall said it retained the discretion to bring each provision into force.
Governor Kidero assented to the Bill on Wednesday.

Motorists will also dig deeper into their pockets to find space for their vehicles in the city following a more than doubling of the parking fees to Sh300 per day from Sh140.

Retail outlets have not been spared the increase in charges and must pay more for an operating licence that is mandatory for all traders in the city.

Supermarkets with more than 100 employees and shop floors of more than 5001 square metres have been hit hardest by the operating licence fee increment and must now pay Sh100,000 up from Sh60,000 to remain in business.

The city government has also increased rents for all its residential property in a move that is set to shake up the finances of some of the poorest households in Nairobi.

The cost of commuter transport is also headed for a major realignment after the city government increased the licence fee for operators across the board.

Mega transport companies with more than 50 vehicles will pay Sh100,000 for operating licences up from Sh80,000 while single vehicle operators will pay Sh15,000 a year instead of Sh10,000.

Parking fees for transporters with large parking lots capable of holding more than 100 vehicles have doubled to Sh100,000, a cost that the operators are expected to pass on to the commuters through increased charges.

City Hall’s increments came only two days after consumers were hit by a strong wave of price escalation that followed Monday’s coming into force of a new law that imposes value added tax (VAT) on a wide range of goods that were previously spared the charge.

Dr Kidero said his government’s decision to increase the charges was necessitated by the huge rise in the cost of services and — in the case of land rates — the more than quadrupling of property prices since they were last valuated in 1982.  

“Land values have increased in all parts of the city at an average rate of 400 times since the 1982 valuation roll,” the governor said, adding that a hectare of land in Lavington is currently valued at Sh100 million compared to the 1982’s value of Sh304,000.

In Upper Hill, a similar piece of land is currently worth Sh300 million from Sh430,000 in 1982.

Dr Kidero decried the high rate of tax default in Nairobi saying that only 125,000 of the half a million properties in the city are paying rates.

“We have a huge shortfall of resources and are therefore undertaking a regularisation exercise to bring on board more than 375,000 properties that are currently not paying taxes,” he said.

“With the new rates and fees, our monthly income will double to close to sh1 billion.”

The cost of temporary accommodation in Nairobi is also set to rise following a reclassification of hotels and lodgings (according to class and number of rooms) and the increase in operating licence fee for each band of operators.

Hotels with more than 100 rooms are now required to part with Sh150,000 for an operating licence up from Sh90,000.

Critical social services, including schools and hospitals, have not been spared the charges, signalling a possible increase in fees with the enforcement of the new law.

The notice that Dr Kidero signed shows that institutions of higher learning with more than 200 students will pay Sh100,000 in operating licence fees up from Sh75,000. A similar rate will apply for hospitals with a capacity of more than 30 beds.

Operating costs are also up for large industrial plants with more than 75 employees who are now required to pay Sh150,000 in annual licence fees up from Sh100,000.

It will also cost more to get building plans and permits approved after City Hall changed the method of computing the charges.

The fee will now be charged as a percentage of the cost of proposed construction based on the prevailing Joint Building Council rates as opposed to the current fixed rates.

Producers of consumer goods must also increase their marketing budgets as the cost of erecting billboards are up by Sh10,000 to Sh36,000 for the first three square metres of a 12 by 6 display. Each additional square metre will cost Sh5,733.

Dr Kidero signed the Bill into law a day after Nairobi County workers went on strike demanding full implementation of a collective bargaining agreement (CBA) they signed with City Hall in February.

The Kidero administration has insisted that it has no funds to meet the demands in the wake of a huge revenue shortfall.

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