Treasury targeting owners of property in tax reform

The Treasury has signalled tougher tax rules on property owners in a bid to collect more revenue.

While details of the planned property tax reforms remain unclear, Treasury secretary Henry Rotich said Thursday the government could rope in the taxman to help county administrations seal loopholes in tax collection for land and property.

“The current property tax is not well designed; valuation rolls are outdated and the coverage is low. We have identified so many challenges,” said Mr Rotich in Nairobi Thursday on the sidelines of a regional forum on fiscal policies organised by the International Monetary Fund (IMF) and the European Union. “What we are going to do is deal with the legal design first, then (see) how we can capacitate counties. Perhaps one option is having the KRA (Kenya Revenue Authority) working with them to collect for them. It is not going to necessarily increase the rates. It is all those aspects we want to look at.”

Last April, Lands secretary Farida Karoney told the Senate Committee on Land, Environment and Natural Resources that the government had finalised taxation guidelines on idle land in efforts to boost agricultural production and enhance food security.

Implementation of the Idle Land Taxation Policy, if adopted by the National Assembly and Senate, would see owners of idle land face penalties.

“We have the Land Taxation Policy that seeks to provide a package of incentives to encourage productive and sustainable use and disincentives for keeping idle land,” Ms Karoney said.

KRA announced last October that it would mine data from National Construction Authority records in its ongoing crackdown on tax cheats. The agency, which is facing the tough task of raising enough revenues to finance the Sh2.97 trillion budget, said it hoped that information from these sources will boost its quest to unearth undisclosed income sources and boost revenue collection.

KRA Commissioner-General John Njiraini said the agency, which has perennially failed to meet its revenue targets, was turning to use of technology to expand the tax base.

By applying this strategy, KRA anticipates to net an additional 500,000 taxpayers from who it expects to collect about Sh60 billion in the current year, Mr Njiraini had earlier said.

The KRA was Sh60.46 billion short of target in the three months ended September following a slowdown in economic activity and delayed implementation of some new tax measures.