Assessment Of The Effect Of Waiving Interest Accrued On Land Rates Arrears In Nairobi County

ABSTRACT

The problem of poor property tax collection and enforcement leading to low property rates collection is rampant in developing countries including Kenya. This is evidenced by the following: poor contribution of property rates to local/devolved governments ‘revenue; insignificant contribution of property tax to GDP; increasing rate of defaulting in payment of property rates; low collection ratios; and high level of intergovernmental transfers. The poor collection and enforcement of property rates is worrying, thus needing the need to evaluate policies and practice of property rates collection and enforcement in devolved systems of governance in Kenya. The study sought to determine whether giving waiver to on accrued property rates contributes to high revenue collection in Nairobi county. The study identified property rates collection and enforcement tools in Nairobi City County; establish effectiveness of the property rates enforcement tools in ensuring fully compliance; and establish challenges facing property rates collection and enforcement in Nairobi City County. The study focused on property rates collection and enforcement in Nairobi City County which hosts Kenya’s capital. The study focused on Westlands, Njiru, Starehe, Makadara,Dagoretti, Embakasi, Kasarani, Langata and Kamukunjisub-counties which are divided into 20 zones. Rateable properties were sampled using stratified random sampling. All rateable properties within the city boundaries were placed into groups (strata) depending on the zones. Stratification was important because of non-homogeneity of rateable properties by zones. Each zone was considered as a stratum. The researcher considered a sample of six (6) zones consisting of Two (2) commercial industrial (Central Business District (CBD) and Upper Hill), Two (2) industrial and Two( Mlolongo & Indutrial area) (2) residential (Makadara & Buruburu;) user to be good enough. The researcher numbered all the industrial, commercial and residential zones. A total of 60 samples were randomly selected from each of the six (6) zones resulting into a total of 360 samples which was considered to be good enough. Other respondents included chief accountant in charge of rates and land rates collection, employees of at the rates department and revenue county manager. The study involved the use of a semi-structured questionnaire which had open and close-ended questions for collection of primary data. Secondary data was obtained from the county’s budget policy statements and income statements published textbooks, unpublished scholarly works and papers from real estate journals. The study focused on a 12 years period of land rates revenue collection in Nairobi county focusing on the periods when waiver on interest on accrued revenue of property rates were and not issued.