Columnists

Go slow on the proposal to increase land services fees in revenue drive

DnDamInitiative1805b

Cabinet Secretary for Water, Sanitation and Irrigation Alice Wahome addressing the 100 Public-private partnership Dam initiative with investors at Sarova Panafric, Nairobi on May 18, 2023. PHOTO | BONFACE BOGITA | NMG

The recent gazette notice by the Lands Cabinet Secretary Alice Wahome proposing to increase fees for various services has provoked public discussion.

There are times when such an increment could be a boon to the provision of land services or a bane to the target consumers. It all depends on the underlying justification, the prevailing circumstances, and the magnitude of the increment. The timing, involvement and communication of the information to the industry matter too.

In Karnataka State of India, for instance, there was a dramatic increase in the land revenue following the digitization of land records, and the decentralisation of land information service points to the villages. Landowners could, for instance, obtain printouts of their official searches and property maps by simply walking to the village land service kiosks. The costs applicable were mundane and affordable.

In this case, the boost in revenue collected was informed by the reduced costs of travel to access the service points, and keeping the costs of the service affordable.

In other jurisdictions, the preparation of valuation rolls and the subsequent levying of land rates led to an increase in land revenues. However, for this result, authorities had to accompany such rates with a demonstrable increase in the access and quality of services such as roads, water and sewerage, power and cleaning.

Where such increments in rates aren’t accompanied by improved services, compliance is often low, and the proportionate costs of collecting the revenue have undermined the intended gains.

There are also countries that have established comprehensive quasi-state land agencies with the authority to recycle revenues collected from land services. These agencies maintain high-quality services for which consumers pay without gripe.

The proposed fee increment by the Lands Ministry hasn’t been justified through improved services, involvement and collaboration with the consumer industry. It also comes at a time when service seekers are struggling with a local taxation regime.

The proposed hike also comes against the backdrop of hard lessons from the recent tripling of capital gains tax from 5 to 15 percent.

This increment was met by a depreciation in the revenue collected. The Ministry’s statistics may reveal that land searches are, for instance, the most sought-after service.

The cost of the service is proposed to rise to Sh1,500 from Sh500. This is a fundamental service, often sought by landowners and institutions during property purchase, compensation for compulsorily acquired land, succession proceedings and processing of bond instruments by courts.

Enhancing the fee when it should be reduced given the ongoing transition to digital services is ill-advised, and may dampen the market. The Ministry should be aware that it serves poor communities, which will be hard-pressed to afford.

Ibrahim Mwathane(Consultant on land governance: [email protected])