Kenyan policy makers have for a long time grappled with the issue of land and property
taxation. This is mainly because of the simultaneous existence of the high inequalities in land
ownership side by side with land shortages and low agricultural productivity. Proponents of
land taxation lay claim to several advantages of the same, namely: (a) They are an ideal revenue
source for local government; (b) Real property is immovable and property taxes are therefore
less distortionary than levying taxes on sales or income; (c) Property taxes will often be
capitalized into property values hence coming close to a benefit tax; (d) Property taxes –
especially if based on the potential monetary yield -will lead to more efficient use of valuable
natural resource, and (e) Land taxes will encourage more efficient land use.
However, others argue against land taxes on account of the following arguments. First, it leads
to increasing land concentration especially where risk is high and insurance markets are either
absent or imperfect. Second, the information requirements for a land tax-size, value, ownership
status, productive capacity and information costs of outputs and inputs-may be very costly.
Third, administrative and political cost may be too high. Fourth, for proper administration it is
important that a property tax law be put in place and that an administrative mechanism be put
in place that can keep registers up to date and assess, collect and enforce the tax. Fifth, it is a
highly visible tax therefore it is politically difficult to enforce. Sixth, the base of the property tax
may be inelastic.
Research needs to be undertaken to ensure that viability of implementing land based taxes.
Specifically there is need to ensure that the implementation of property taxes should take
account of a number of issues:
i. Assessment for the tax: should it be based on area occupied, property value or a system
of self assessment to ensure that the tax is neither distortionary nor administratively too
costly to impose.
ii. Setting of tax rates: this has to do with whether the tax rates should be set locally or by
central government.
iii. Tax administration: it is important that the administration is strong enough to ensure
that it is not an impediment on property tax and that the collection costs are not too high.

Kenyan policy makers have for a long time grappled with the issue of land and property
taxation. This is mainly because of the simultaneous existence of the high inequalities in land
ownership side by side with land shortages and low agricultural productivity. Proponents of
land taxation lay claim to several advantages of the same, namely: (a) They are an ideal revenue
source for local government; (b) Real property is immovable and property taxes are therefore
less distortionary than levying taxes on sales or income; (c) Property taxes will often be
capitalized into property values hence coming close to a benefit tax; (d) Property taxes –
especially if based on the potential monetary yield -will lead to more efficient use of valuable
natural resource, and (e) Land taxes will encourage more efficient land use.
However, others argue against land taxes on account of the following arguments. First, it leads
to increasing land concentration especially where risk is high and insurance markets are either
absent or imperfect.
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Land concentration of buildings helps to utilise infrastructure efficiently, hence reducing cost of infrastructure to the public.
Second, the information requirements for a land tax-size, value, ownership
status, productive capacity and information costs of outputs and inputs-may be very costly.
Already Local Govt has zoning controls in all areas of kenya.
Third, administrative and political cost may be too high.
Already Govt has employed Planners in Local Authority so no added cost.
Fourth, for proper administration it is
important that a property tax law be put in place and that an administrative mechanism be put
in place that can keep registers up to date and assess, collect and enforce the tax.
Property tax and Land Value tax are independent of each other.

Fifth, it is a
highly visible tax therefore it is politically difficult to enforce.

Visible tax is impossible to evade hence better tax colection.
Sixth, the base of the property tax
may be inelastic.
Property tax has nothing to do with Land Value tax.
Research needs to be undertaken to ensure that viability of implementing land based taxes.
Specifically there is need to ensure that the implementation of property taxes should take
account of a number of issues:
i. Assessment for the tax: should it be based on area occupied, property value or a system
of self assessment to ensure that the tax is neither distortionary nor administratively too
costly to impose.
ii. Setting of tax rates: this has to do with whether the tax rates should be set locally or by
central government.
iii. Tax administration: it is important that the administration is strong enough to ensure
that it is not an impediment on property tax and that the collection costs are not too high.

An Australian is visiting Kenya, and feeling thirsty, he stops at a house along the road. "Can you give me a drink of water?" asks the Australian.
"Of course," says the Kenyan, and invites the Australian to come in.
"What do you do?" asks the Australian."I raise a few chickens," says the Kenyan.
"Really?" says the Australian. "I'm also a farmer. How much land do you have?"
"Well", says the Kenyan, "out front it's fifty feet, as you can see, and in the back we have close to a hundred feet of property. And what about your place?"
"Well", says the Australian, "on my ranch, I have breakfast and get into the car, and I drive and drive...and I don't reach the end of the ranch until dinnertime."
"Really," replies the Kenyan. "I used to have a car like that."

@masukuma, you have a point that will need fixing at some point, the sooner the better and less painful.

The most fertile areas in Kenya are the ones with immense land pressure, leading to fragmentation that cease making economic sense.

Some dictator should consolidate the land in these area, forcibly move the residents to mega cities and release the land for commercial farming. It works in the so called developed countries, why not Kenya?

It is easy to say as I will never be President.

Nobel price in economics shared between proponents and opponents of an idea!..Eugine fama,and Robert shiller. I think there's so much unknown in economics as a science and that's why poverty has never been completely eradicated,models many times don't work, financial crises are unpredictable,asset bubbles happen...all this bcoz the HOUSEHOLD IS MANY TIMES IRRATIONAL (yea forget econ 102)..binadamu ni wazimu!